Credit cards for travel are a must these days; from booking hotels, renting cars, to making large purchases, using credit can be much easier than cash or cheques.
Cash will always be king, but getting foreign currency back at home can cost you a small fortune since banks and foreign exchange offices can charge up to 10% on the spread. Credit cards offer a convenient way to make purchases while giving you invaluable benefits such as free travel medical insurance and chargeback. Using credit cards abroad will also help protect you from identity theft while travelling.
Using credit cards abroad won’t reduce your spending or make your trip cheaper, but with these tips you can save on excessive fees and protect yourself from fraud.
Prepare your credit cards for travel before departing
1. Get a no foreign exchange fee credit card
Using credit cards for travel is convenient, but did you know that most credit cards charge an additional 2.5-3% when you make a purchase in a foreign currency? It may not sound like a whole lot of money but why spend more when you don’t have to?
I recommend picking up a no foreign exchange fee credit card; this allows you to make your purchases at the spot rate with no worries about additional fees. The Amazon.ca Rewards Visa Card is a popular choice among Canadian travellers since it’s a no foreign exchange fee credit card and there’s no yearly fee associated with it.
2. Check your Personal Identification Number (PIN)
In Canada, PINs for your credit cards can be anywhere from 4-6 digits; however, in many countries, 4 digit PINs are the standard. Make sure your PINs are 4 digits otherwise your credit cards may not be accepted when travelling abroad.
Down in the US, PIN cards aren’t even common. When making purchases at automated machines it’ll prompt you for your zip code, which Canadians obviously lack. This can be a real annoyance so MasterCard and Visa introduced a workaround. When prompted for your ZIP code, simply take the 3 digits from your postal code and add ‘00” (zero zero).
Example: A1B 2C3 postal code would become 12300 U.S. ZIP code
This is not a foolproof method so always keep a little cash on hand or just pay in person.
3. Call your credit card providers
Unknown foreign purchases are a red flag for fraud, so your credit card provider might put a temporary lock on your card. You can avoid this by simply calling them before you leave to let them know your dates of travel and which countries you’ll be visiting. While you have them on the phone, find out what number to call if you need to report a lost card. Make sure you’re getting their collect call number so you don’t have to pay the long distance charges while dealing with your emergency.
Using credit cards abroad
1. Pick the local currency
Charges for using credit cards abroad can sometimes sneak up on you. When using credit cards for travel, some merchants will allow you to choose which currency you want to be charged in. Always choose the local currency. It may sound like a good idea to charge it in your home currency to avoid currency exchange fees, but the converted price is almost always higher than the spot rate. Since you’re using a no foreign exchange fee credit card anyway, it’ll save you some money if you just select the local currency.
2. Keep your ID with you
As mentioned, in the US PIN cards are not common so they just use the good ol’ swipe. Since swiping is susceptible to fraud, many merchants will require you to show identification to ensure you are the owner of the credit card. It’s not just the US that asks for ID; other foreign merchants still ask for ID just to make sure they aren’t getting ripped off.
Whatever country you’re travelling to, make sure you follow customs guidelines to ensure you can bring all your purchases home to Canada. Here are some guidelines for how much you can bring back to Canada from the US.
When you return home
1. Change your PIN
Using credit cards abroad is easy, but no matter how much you protect yourself when travelling, it’s impossible to know if your cards have been compromised. Take the proactive approach and change your PINs as soon as you get home; this way even if your cards have been cloned, it will be impossible for thieves to use them.
2. Check your statements
As soon as you get a chance, check your online statements to make sure no suspicious charges have appeared on your account. It’s possible that merchants use a different name when processing credit transactions, so try to keep a log of your spending when travelling.
Credit cards for travel really are a must, and as you can see, they offer you convenience and protection when travelling. When using credit we tend to spend more, so keep your spending in check by keeping a log of all your purchases. As always, pay off your bills on time and in full to avoid any interest charges.
Last but not least, it’s always a wise financial decision to travel protected. Travelling to the US? It has some of the highest medical costs in the world; this is why Canadians shopping in the US need emergency medical travel insurance. Travelling to a destination where you think healthcare is cheap? Think again. Countries like Mexico have surprisingly high healthcare costs.
Have any questions about using credit cards abroad? Leave a question below.