Are you finally thinking of taking that vacation abroad you’ve been waiting for? Well, you might want to consider signing up for a travel credit card if you haven’t already.
While yes, you always want to have some cash on hand just in case, a credit card to top up your expenses can make traveling abroad a whole lot easier. For one thing, you won’t really have to worry about currency conversions, and with the right credit card, you won’t have to pay excessive foreign transaction fees.
However, simply using a credit card does not in itself make spending abroad cheaper. Here are some tips and tricks you can use before you go and during your trip that can help you have a hassle-free vacation and maybe even save you a pretty penny.
Maximize the benefits of your travel credit card
The main purpose of using a travel credit card though is to get more travel-related rewards than most travel cards offer.
Travel cards are rewards-based cards that allow you to earn points or airline miles from different loyalty programs when used for purchases. Some also offer discounts on travel packages or airline tickets.
How to get the most out of your travel credit card?
- Be sure to collect travel miles if your card rewards them
- Take advantage of any travel insurance coverage provided with your travel credit card
- Claim your discount benefits on airfares, attraction tickets, and travel experiences, which travel credit cards typically offer as part of their benefits
- Look for special offers that some travel credit cards offer for online bookings on travel sites
Use cards with low foreign transaction fees
Many, but not all, credit card issuers will tend to charge a fee for purchases made overseas from a foreign seller. These fees generally range from 1% to 3% of the total cost of each purchase. This may seem insignificant at first glance, but can make you pay a lot more than the listed price. Not to mention the fact that multiple purchases can easily add up over time. At the end of your trip, you could end up with a much larger bill than expected.
Before leaving for any trip abroad, do the following:
- if your credit/debit card issuer to see if your agreements include foreign transaction fees
- apply for cards with no foreign transaction fees or opt for those with the lowest possible fees
- use debit cards that do not charge additional fees for ATM withdrawals in foreign countries
- if you use your debit cards while travelling, try not to use them for online purchases abroad
- apply for the card early so you have enough time to get approved and register your new card properly before you go
By the way, foreign transaction fees may also apply to purchases made online from your home country when the merchant is foreign and processes the transaction in their local currency. You should keep this in mind when making hotel and accommodation reservations before you travel.
Stay away from Dynamic Currency Conversion (DCC)
Dynamic Currency Conversion is a feature that allows you to make credit card purchases in a foreign country using the currency of your home country. This conversion takes place at the merchant and allows you to immediately see how much everything costs in RM, wherever you are in the world.
Sounds good, right? Just leave the currency conversion calculations à la carte and spend with peace of mind.
Unfortunately, the exchange rate for dynamic currency conversion tends to be unfavorable to cardholders.
If a foreign merchant asks you whether you want to pay in foreign currency or in your home country’s currency, it’s almost always better to opt for the local currency. If you really want to be sure to avoid DCC transactions, you can always resort to cash. Exchange rates offered by your local bank and currency converters are likely to have better rates than DCC can offer.
Keep your money safe
Security is another area where credit cards have an advantage. Not only are credit cards easier to hide and keep safe, but also because even if your card is stolen or lost, you don’t lose money.
While many people dread the idea of a random person using their credit card, all you have to do is remember to make an official report if your card is stolen or missing, and you’ll be good to go. any unauthorized purchases.
At the same time, if you use your debit card while traveling for easier access to ATM withdrawals, try not to use them for online purchases abroad.
Inform your issuer of your trip
Preparing the right cards for your vacation abroad is one thing, but letting your issuer know where you’re going is just as important. Tell your issuer about your travel plans and ask for an emergency contact number you can use to call for help while you’re abroad. This will not only ensure that your cards will not be suspended in the event of loss or suspicious activity, but will also give you a way to contact your issuer for free if anything unexpected happens.
Interestingly, some card issuers no longer require cardholders to notify them of upcoming trips. Be sure to check with your credit card company if your card has such built-in features.
Wait a minute, weren’t we talking about credit cards? Yes, while credit cards provide security as you don’t need to carry a wallet full of cash on your trip, and the convenience offered allows you to make hassle-free payments, go on vacation in a foreign country with only your cards is not a good idea. And if you play your cards right, the cash can even help you save money.
Cash will help you avoid some of the transaction fees that are applied to cards, especially if you don’t have a card with no foreign transaction fees. However, its main strength is that cash is undoubtedly the most commonly accepted method of payment.
Yes, there are places that aim to become truly cashless. There are also places that don’t accept credit or debit cards at all. Therefore, you should always carry cash when traveling as a safety net.
Minimize the hassle
Foreign travel is never a simple undertaking, not to mention that it tends to be quite expensive. That being said, there are always little things you can do to help minimize the cost and hassle of spending abroad.
By simply letting your credit card issuer know about your travel plans, paying in local currency, and having a travel card with no transaction fees, you should be able to avoid any unpleasant surprises once your next card statement arrives.
A vacation abroad should be something to enjoy and remember, and not be about conversion rates and dealing with foreign money.
How to find the best travel credit card
Tip: How to use your credit card to save money while traveling
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