Best* credit cards to use overseas
Learn how to use a credit card on your next overseas trip to avoid international transaction fees and get complimentary travel insurance.
By choosing the right credit card, you could save with no foreign transaction fees and no ATM withdrawal fees and enjoy features such as credit card travel insurance, reward points or access to airport lounges. Unfortunately, these types of credit card usually don’t come for free. Since the right credit card for you will depend on where you’re travelling, your spending habits and your current financial situation, you can use our guide to learn how to compare your options and find the best travel credit card for you.
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How to choose the best credit card for overseas travel
Most major banks and credit unions offer credit cards specifically designed for overseas travel. With a large range of travel cards on the market, here are some of the features you should compare to find the right one for you:
In your hunt for a credit card to use overseas, one of the first features to consider is international acceptance. Credit cards with affiliation to Visa or Mastercard are accepted in most countries around the world, at ATMs and credit machine terminals alike. Acceptance of American Express cards is not as widespread and their use could attract higher fees or no use at all. Make sure the card that you’re using isn’t restricted in the country you plan to travel to.
Credit card fees
Before selecting a credit card, it’s important to understand how much your card could cost you. Consider the following fees when comparing travel credit cards:
- When you make an international purchase using your card, your Canadian dollars are converted to the local currency. When this happens, you’re usually charged a conversion fee between 2-3%. If you want to avoid this fee each time you make a transaction overseas, consider a credit card that doesn’t charge a foreign currency conversion fee.
- If you have a card that’s designed for overseas use and it comes with extra features, it’s likely that it could also come with a higher annual fee. Before you apply, make sure the value you get from the card outweighs the cost. Some cards also come with no annual fees for a specified promotional period or for the life of the card, so you should also factor this into your comparison.
- If you use your credit card to withdraw funds overseas, you might be charged a few different fees. Firstly, most credit cards charge a cash advance fee when you use your card for ATM withdrawals (whether you’re in Canada or overseas). As well as the cash advance fee, you’ll attract the cash advance interest rate, which is charged immediately. Secondly, many banks charge an overseas ATM withdrawal fee when using your card for withdrawals outside of Canada. Thirdly, the local ATM provider might also charge a withdrawal fee. If you want to avoid this last fee, consider using a credit card that belongs to an ATM alliance.
If you’re travelling overseas, you’re going to have to look into getting international travel insurance. Using a credit card that offers complimentary insurance can help you save the time and money you’d otherwise spend on standalone coverage. Depending on the card, the international travel insurance usually includes overseas medical insurance, transit accident insurance and travel delay insurance to name a few. The coverage might also extend to your spouse or any dependent children travelling with you. As well as travel insurance, some credit cards offer purchase security insurance and extended warranty so you can shop with extra peace of mind. Complimentary insurance is often a feature of platinum credit cards, so make sure the feature is worth the cost of the card before applying.
Using a travel rewards credit card is an easy way to earn reward points as you spend money overseas. Depending on the card you choose, you might be able to redeem these points for flights with a specific airline, accommodation with partner hotels, travel vouchers, cashback on your account or products from a rewards store. If your card is designed for overseas use, you could earn more points on foreign purchases. Compare travel rewards credit cards with no foreign transaction fees to earn points without paying any extra costs for using the card overseas.
What to look our for when using a credit card overseas?
- Adding funds to your credit card. Some travellers add funds to their credit cards accounts before they travel overseas, and they then make use of these funds through their card in the form of a debit card. By doing this, you can avoid paying interest. However, when you do this, credit card providers don’t take any responsibility for funds you add to your credit card account. So, if your card is lost or stolen and used for unauthorized transactions, you likely won’t be protected the same way you are if you used the card as a credit card.
- Consider other options. Using your credit card is not the only way you can spend money overseas. You can use traveller’s cheques, travel money cards and you can even use a Mastercard or Visa debit card. In fact, it’s wise to organize more than one travel money option before leaving for your trip to ensure you’re not stranded without cash in case your card is lost or stolen.
- Excessive debt. A credit card may tempt you to overspend while on vacation. It’s important to remember that you have to repay everything you purchase using your card (plus interest if you don’t pay it back on time), so make sure that you’re spending with a budget in mind so that your balance doesn’t get out of control.
Pros and cons of using a credit card overseas
- Global acceptance. If you’re using a Mastercard or Visa credit card, you’ll be able to use your credit card in millions of locations around the world. American Express cards are also accepted worldwide, although in much fewer places than Visa or Mastercard.
- Travel perks. Credit cards designed for overseas use often come with travel-related benefits such as travel points rewards programs, complimentary insurance, concierge services and airline lounge passes.
- Security of credit. When you’re travelling overseas, it’s wise to have more than one way to access your cash. Even if you have a prepaid card or debit card organized for everyday spending, a credit card can be used as a backup in case of an emergency.
- Fees. Depending on the card, using your credit card overseas can come with many costs. Make sure you understand exactly what you’ll pay when using your card for foreign transactions before you swipe it.
- Limitations. Some cards come with limitations, including eligibility requirements and restrictions on how and where you can use the card.
- Temptation to spend. While a line of credit can provide you with peace of mind, it might also tempt you to spend money that you don’t really have. Remember that you’ll have to pay back everything you purchase (plus interest if you don’t pay your balance in full).
The best credit card you can use overseas is one that suits your spending needs and unique financial situation. Given the many options on offer in the marketplace, you should take some time to compare different cards in order to find the best one for your needs.
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