Travel and Money: Using Your Credit Card on the Road

By Nora Dunn. Last updated 8 July 2014. 17 comments

Your next vacation won’t happen without money…both prior to and during your trip. But with currency conversion discrepancies, high surcharges, and the risk of theft or loss, managing your money on the road isn’t as simple as you may think. This Travel and Money series discusses various ways to address your money issues while you are abroad.

Today we will discuss using your credit card on the road. There is no denying that credit cards are very necessary for travel, as they’re often required to book travel arrangements (like flights and accommodation) in advance. They’re also incredibly convenient and useful — but must be used correctly, and with caution. I don’t recommend charging any travel expenses to your credit card if you don’t have the ability to pay it off (in full) immediately. The massive interest rates alone make no financial sense, and can put you in financial strife if you come up against an emergency and have no cash and a maxed out card.

Having said that, my credit card is one of the most useful travel tools I have. (See also: 5 Best Travel Reward Credit Cards)

Credit Card Advantages

Despite some challenges I’ve had, credit cards are my preferred way to pay for everything while traveling for a number of reasons:

  • It provides a detailed record of my purchases
     
  • The currency conversion surcharges are reasonable (although rates vary with different credit cards)
     
  • If my card or identity is stolen, I am usually not liable for the erroneous purchases
     
  • I get some automatic travel insurance coverage by charging flights and car rentals
     
  • The frequent flyer miles help to fund further travels

Credit Card Precautions

But using a credit card on the road isn’t all roses and cherries. Here are some things to be aware of:

What type of credit card are you interested in?
How much do you spend per month?
Do you carry a balance?
  • If you use your credit card for cash advances, interest is charged from the date of withdrawal (instead of after 30 days as with regular purchases).
     
  • Depending on the credit card,currency conversion surcharges can vary as much as 10% between the best and worst cards. Take care to read the fine print.
     
  • Some merchants charge extra for using credit cards — up to 10%. The last time I was in Mexico, for example, almost every merchant charged exorbitantly for me to use my card. (In this case I used my debit card at the ATM to withdraw cash instead).
     
  • In dodgy countries or areas, it’s not unheard of for vendors to “double-swipe” your card or record your number for later use. Don’t let your card out of your sight, and insist on a receipt.
     
  • Some merchants will give you the option of charging the purchase in your home currency. Usually it’s best to decline the offer (and you can do so), because they tend to use less favorable conversion rates, and your credit card will sometimes still levy the foreign currency surcharge. This can cost you up to an additional 6% over simply charging the expense in the local currency.
     
  • Although it may seem convenient, resist the urge to use your credit card for long distance calls with a payphone! Twice I was in a jam at an airport and made extremely quick calls, and was charged up to $150 for less than five minutes of conversation. Consider yourself warned!

Using Your Credit Card Abroad

Here are a few things you should take care to do if you use your credit card abroad:

  • Call your credit card company before you leave for your trip to advise them of your travel plans. Otherwise, if they see purchases coming from out-of-town, they may freeze your account in suspicion of the card having been stolen. Although sometimes they freeze the account despite your advisory, they’ll almost certainly freeze it if you don’t give them the head’s up.
     
  • Check your statements religiously. Go through every expense on your credit card statement each month, to ensure all the charges are legitimate and accurate. If you see any discrepancies, call the credit card company right away. Later in this series, we’ll discuss the best way to view your statements online and pay your bills securely.

Rewards Cards

As I said earlier, one of the perks of using my credit card to charge my expenses is in the accumulation of frequent flyer miles. But there are a number of different types of credit cards rewards programs. Here is a chart with some of the best credit cards for travelers along with the benefits they offer.

Other articles in the Travel & Money series:

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Guest's picture

Thank you for the wonderful article. I am already an avid user of my credit card during vacations and travels. It really saves me a lot of time and saves me a lot of effort to carry these bills in my wallet. Plus, it really contributes to my credit reputation. I am very pleased really.

Nora Dunn's picture

@Insure Tim - Great point about increasing your credit rating with consistent use (and payments) with your credit card! Thanks for the reminder.

Guest's picture
R4i

Credit card users must always beware since many ATMs abroad don't always accept LINK cards, which sometimes causes your card not to work when it's not your bank's fault at all!

Nora Dunn's picture

@R4I - I never use my credit card in ATMs, because the interest charges for cash advances are immediate and obscene. If I need cash, I use my debit card. Great tip about the LINK problem though - thanks!

Guest's picture

The biggest advantage for me is credit card use in vacation helps people to breakdown their spending cost later. Nearly every major credit card website or website like Mint is a good tool on assessing what we really spend on vacation.

Nora Dunn's picture

@MeWithoutDebt - Indeed; I love to have a record of my expenses, and to review it each month. Credit cards help with just that.

Guest's picture
Rhonda

Helpful article! I did not know about not using your card for phone calls. We had trouble in England with a restaurant not accepting our card because it didn't have a certain microchip in it.

Nora Dunn's picture

@Rhonda - I've actually had more trouble with my credit card now that the microchips have been introduced than ever before! I much prefer to sign for my purchases instead of entering a PIN, and some machines have trouble recognizing the chip - but won't accept the stripe either. I feel your pain!

Guest's picture

Thanks for the helpful chart. This post is great and just in time for the high-travel time of the summer.

Guest's picture

Even with calling ahead, you still may find your credit card cut off. Why? Because if you don't buy big items, and suddenly you drop $400 Euros on jewelry in Italy, it raises a red flag.

Guest's picture

Nice article! It might also be worth applying for a credit card with no foreign transaction fee before you go on your trip, as this usually will cost you an extra 2-3 % on all of your purchases. Capital One offers the most credit cards with no foreign transaction fee as far as I've seen.

Guest's picture

Another excellent article as usual, Nora.

Funny, how different travelers use different systems. As we approach our 5th year of our open ended, non-stop world travel as a family, we have almost NEVER used credit cards because of some of the down sides you mention. The currency conversion surcharges can be VERY painful when you are in countries that have a much stronger currency ....even with the best of them.

I don't think we could travel as luxuriously or as cheaply as we have in Europe ( 23 dollars a day per person for many years) had we used our credit cards, especially when the dollar was so low compared to the euro ( most of the time we were here).

Of course, we do extended travel, so our needs are different than someone coming her for a two week holiday or vacation.

Guest's picture
Cindy

Traveler's checks were once the most popular method used for spending money when traveling overseas. Today many travelers tend to use credit cards which can be the safest and most effective way of carrying currency. Credit card purchases are exchanged at the interbank exchange rate which is typically the best rate available for currency exchange. Before you travel abroad it is a good idea to call your credit card issuer and inquire about fees which may apply to your purchases while traveling. You should also let your credit card issuer know where and when you will be traveling. This is important so the international activity on your credit card will not alert the card issuer's fraud system.

If you are considering using a debit card or ATM card keep in mind credit cards have security measures making them much safer to use. Most credit cards come with an insurance policy which will cover loss or theft of your card. Paying with credit cards gives you the advantage of purchase protection. Pick a credit card to travel with which is accepted in most countries. Visa and MasterCard are both widely accepted.

Before traveling compare your credit card issuer's fees which will be charged for overseas purchases. Decide which of your credit cards will be best to use abroad. If you are searching for a new credit card with better rates and lower fees please visit http://www.cardtohave.com . You will find a wonderful selection of credit card offers available to suit individual needs.

Guest's picture
IlyceGlink

A friend was telling me about a time her credit card company called her on vacation to ask if her card had been stolen because the company noticed out-of-state charges on her account. It's a nice piece of mind to know someone's watching out for you.

Guest's picture
kathleen brennan

Looking for guidance on upcoming last minute vacation with Family to Universal Orlando ...

Guest's picture

I agree. I was just at Hawaii and my credit card helped tons!

Guest's picture
TRX

Wow! That Visa Black Card has a $495.00 annual fee. That credit card is definitely not for me.