Prepare for your next adventure with a travel credit card. Look forward to no foreign currency conversion fees or ATM withdrawal fees and the convenience of complimentary insurances.
America’s love for traveling is well-known. However, organizing your travel money options is crucial for a stress-free holiday. Expenses such as foreign currency conversion fees, ATM withdrawal fees or emergency credit card replacements can be an unexpected strain on your budget. Comparing credit cards designed for overseas purchases can be a wise way to avoid some of these charges.
Here we will compare the travel credit cards available in the market to help you determine which is the right option for your next overseas trip.
What features do I need when choosing a travel credit card?
Some of the features you can expect from a travel credit card include:
- Worldwide acceptance. Most overseas credit cards are provided by Visa, Mastercard or American Express. These types of cards are accepted worldwide, so this will ensure that you can access your cash no matter where you are.
- No or low currency conversion fees. If you try to use U.S. dollars to make a purchase in a foreign currency, you’re likely to incur a currency conversion fee. Most credit cards charge as much as 3% on currency conversion fees, though some offer low or no fees on foreign transactions. If you’re planning on traveling overseas, this type of card could be of interest.
- Complimentary insurance. If you’re traveling overseas, travel insurance is a necessary precaution. As the US Government doesn’t pay for medical treatment overseas or medical evacuation, so it’s good to organize comprehensive medical cover before traveling aboard. If you secure a card with complimentary insurance, this will save you the extra time and cost that comes with searching for extra cover.
- Emergency card replacement. In the case that your card is lost, stolen or damaged, you may need to request an emergency card replacement. Travel credit cards often offer low or zero fees to replace your card, which could come in handy if you find yourself in such a bind.
- ATM withdrawals and balance check. Carrying cash while traveling comes with risks, so storing your funds on a card can be of use. However, using a regular card can come at a cost of up to $5 per ATM withdrawal and balance check – which can add up over time. Travel cards, on the other hand, sometimes offer free ATM withdrawals and balance checks which can cut out these extra costs.
What else should I consider when using a travel credit card?
There are a couple of points you should consider before using a travel credit card. They are:
- Beware of the dynamic currency conversion. Dynamic currency conversion (or DCC) is often used by merchants to their own benefit. Merchants will quote the price of an item in USD, however, the dynamic currency conversion used in these transactions does not give the best exchange rate. You can directly withdraw cash in the local currency and pay in it or you can use one of the conversion apps on your smartphone to find if you are getting good exchange rate.
- Load your credit card with extra funds. While your travel card may not charge currency conversion or ATM withdrawal fees, they usually pose high cash advance fees and interest rates. This fee can be up to 2% of the amount with an interest rate as high as 20-21%. As credit cards aren’t designed to be used as debit cards, a good option can be to load your card with extra funds before leaving. This means that you can withdraw your loaded funds without incurring a cash advance fee.
- How can I protect myself? Currency fluctuations can have either a positive or negative impact on your balance. If you’re worried about losing money due to rate changes, you can exchange your funds to the local currency when it is at a beneficial rate to protect yourself.
- What are the relevant fees and charges? Carefully consider the fees and charges associated with the card before applying. You should also consider any terms and conditions or exclusions and limits associated with complimentary insurances before traveling.
- Does your bank know you’re traveling overseas? In case your bank misjudges your overseas transactions as fraudulent activity, you should inform your provider of your travel plans before leaving. Otherwise, you may find that your card is blocked and you no longer have access to your funds while overseas.
- Is my card restricted by geographical sanctions? Some providers place financial sanctions on certain regions. If you’re unsure, contact your provider or read the relevant Product Disclosure Statement to confirm whether you can use your card on your next holiday.
Prepare more than one option: What else can I use in addition to my credit card?
It’s never wise to put all of your eggs in one basket. Therefore, it’s best to organize more than one travel money option when planning your overseas trip. Some other options you can consider include:
- Prepaid currency cards. If you need to spend in an overseas currency, a prepaid travel card can be a good way to transfer your U.S. dollars into the local currency and access it with convenience. Some benefits you can expect include fixed exchange rate, easy access, multiple currencies and reduced risk of overspending than if you were to use a line of credit.
- Debit cards. A debit card can also curb the temptation to overspend, as you’re spending your own cash rather than credit. These cards usually don’t charge a cash advance or heavy interest rates, which could also lower your costs. However, make sure to confirm whether currency conversion or foreign transaction fees are in place if you’re planning to use it overseas.
- Cash. This is simple and easy to use alternative. There are no extra fees, exchange rates or restricted acceptance. However, carrying cash does come with risks. You should always keep some cash on you and some in a secure place (such as your luggage or hotel safe) to ensure that you’re not left without cash in case of an emergency.
- Travelers checks. While these aren’t as widely used today, they are still a popular option among some travelers. If you’re looking to lock in exchange rates and have an easy replacement if your funds, a traveler’s check could be a good idea. Make sure you’ll be able to cash your checks along the way through.
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How to prepare before you leave
You can look at the following aspects of a travel card before leaving on your trip:
- Upgrade your card. Many countries like Britain, France, China and New Zealand have shifted to chip technology. If your card does not have this, you may need to upgrade your card before leaving.
- Have your provider’s emergency contact details on hand. Note your provider’s emergency contact number in your wallet, on your phone and anywhere else secure in the case of an emergency.
- Bring more than one card with you. It is always better to have a buffer card which can be used if the main card is stolen or gets lost. This card should be carried in a different wallet or bag which will reduce the chance of losing both cards.
- Are there restrictions for withdrawals or purchases? You need to look at the limits on withdrawals or purchases on your card. Using the card prudently will prevent exceeding these limits and also avoid any unnecessary penalties.
How to protect yourself when you arrive
Following these precautions should help ensure your trip runs smoothly:
- Don’t carry a lot of cash. Travelers should avoid carrying a lot of cash or wearing expensive jewelry. This might attract negative attention and can lead to unpleasant experiences.
- Safely store your cards, cash or checks in various secure areas. Carrying all your cards and cash in a single location or wallet is not advisable. You should distribute these items among your secure belongings. It is better to carry an alternative wallet which can store excess cash and other important items. It is also better not carry the main wallet in your back pocket, but rather somewhere secure that you can see.
- Keep your passport safe. It’s also important to store your passport securely. If you have a secure place to store it, keeping your passport with you is a good idea as this is your primary legal document as a traveler.
- Report any emergency situations immediately. As mentioned, make sure that you have all of your necessary contact numbers on you. This should include those of your personal emergency contacts, your credit card providers, and your insurance provider. This will ensure that you can get in contact with the relevant people in the chance of an emergency.
Traveling can be an unforgettable experience. However, some of these memories may be less pleasant than others if you fail to organize your travel money options. There’s no one ideal travel money option, so it’s best to compare your options while considering your travel plans, spending habits and financial situation to choose the right combination for you.