Planning an International Trip ?? Read here all about using Credit Cards Abroad
Traveling overseas and financing your trip with currency or traveler's cheques is a thing of the past.
Using a credit card is like taking a short-term loan from a bank and you have to pay within a billing cycle usually of 50 days.
In this blog, we will go through credit cards and how they might aid you on your next trip overseas. It is an unfortunate fact that credit card companies set fees for overseas transactions. However, there are some ways you can reduce this fee and make your vacation more affordable.
You should shop around for a credit card before you leave home. Credit cards may offer different policies and terms depending on the bank and the type of card you get. Some may waive all fees while others may charge a higher interest rate on purchases and cash withdrawals.
Tips while using credit cards abroad:
Widely Accepted Cards
The chances of acceptance of your visa or MasterCard cards are very high. You have to make sure the card you are planning to use on your trip is a visa or Mastercard. A Rupay card is a domestic card which means it will only be accepted for domestic transactions.
Inform Your Bank
The most crucial thing is to inform your merchant bank of your international journey. This is because if your credit card shows foreign purchases, they may associate this with suspicious activity and freeze your account. To avoid confusion, tell your credit card issuer in advance by using the app or contacting your bank.
Memorize Your Pin
With the adoption of chip and pin technology, merchants will require your pin after you use your card, so make sure to set up and memorize your pin beforehand.
Avoid Foreign Transaction Fees
Most credit cards have a foreign transaction fee on every purchase overseas; this can typically range from 1 to 3%. Transaction fees on every purchase can make your trip expensive. It is suggested to read your agreements and opt for a credit card that doesn't charge foreign transaction fees. Make sure you select and order your credit card beforehand so you get time for approval, account set-up, and the arrival of your physical card.
Avoid Dynamic Currency Conversion (DCC)
The option of paying in your home currency at the time of sale is known as dynamic currency conversion (DCC). The amount shown at the point of sale in your home currency is not the final amount of payment; there will be add-on charges like mark-up fee which is usually greater than 2.5%. And your credit company may still charge you foreign transaction fees up to 2.5% as the transaction has taken place in a foreign country. Choosing to pay in a home currency can charge you more in any transaction.
Withdrawing Money Using Credit Card
If you need cash, you can use your credit card at ATMs to withdraw cash in local currency. It is advised to use this option only as a last resort due to the two to three additional costs that are normally levied.
Is it wise to use a credit card when traveling abroad?
So, is it worthwhile to use a credit card when traveling abroad, or should you examine other choices instead? The pros and cons of using credit cards in overseas transactions will help you determine.
List Of Pros:
Credit cards, without a doubt, are a more convenient payment option than cash since they eliminate the need to carry huge amounts of cash and the tedious task of currency conversions. It is particularly useful for large transactions such as flight and hotel bookings, as well as purchases in smaller denominations when you are short of change.
The advantage that makes credit cards so popular is the presence of rewards. Credit cards offer rewards for spending. Some banks have partnered with airlines to provide you with benefits such as free lounge access and other perks. Depending on the bank and the credit card type you choose, you can also get bonuses and cashback offers.
Traveling is exciting for everyone, but it can also lead to fraud or theft. If your card is stolen or misplaced, you can easily cancel it or place a temporary lock on it. Depending on the bank in such cases you can access your emergency cash.
Nobody enjoys the feeling of searching for rates and spending more than the current market rate. When merchant fees and commissions for currency conversion are factored in, it might be confusing. Using a credit card allows you to exchange money at a set rate provided by a bank or credit card provider that is usually better than physical cash rates or ATM rates.
Credit Card Insurance
If you are a frequent flyer it will be best to get a credit card that provides travel insurance. Depending on the bank most of the time it covers loss of luggage, passport or documents, hospital bills overseas during medical emergencies, flight delays or cancellations, ambulance charges during medical evacuation.
List Of Cons:
While a credit card may appear to be the best option, the interest rates for non-payment of the whole amount due on time can be very substantial. To ensure that your payments are made on time, we recommend setting up a monthly direct debit.
Credit cards have a bad reputation for hidden costs, which makes the average person afraid of them. If a bank promises you a credit card with no fees, you should be cautious. As there will be hidden charges which you will be liable to pay. We recommend you to read every single word on the document and make sure the foreign transaction fees are little to zero. As foreign transaction costs with hidden fees can go up to 10 percent.
Not For Everyone
A credit card is not for everyone. If you have the habit of going on a shopping spree then it’s better to use a debit card or cash. You need to have a financial discipline for using credit cards so it doesn’t mess with your savings. To overcome this make sure you keep a close watch on your spending and be within your budget while traveling.
Some credit cards require constant verification on every transaction or purchase which becomes a hassle to provide a passport every time you use a credit card.
Don’t want to use credit cards then try considering
If you don't want to use a credit card, you can use cash, traveler’s cheques, debit cards, forex cards, or a combination of these. If you are a frequent traveler, we recommend having a credit card with travel insurance and using a combination of credit, debit, and currency cards.
We hope that after reading this blog, you have a better understanding of the tips to bear in mind and that if you are unsure whether or not to acquire a credit card, it has helped you make a decision based on your needs.