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It’s Smart To Use A Credit Card When Traveling Abroad

When traveling abroad, you will be among different cultures, customs and business practices.  This, at times, can lead to fraud and theft.  Also, you will be subject to currency conversion charges, which will add significant additional cost to items purchased.  Finally, carrying a large amount of cash while traveling in a foreign country is not advisable.  It can be stolen, and there are usually high conversion charges when converting U.S. dollars to a foreign currency, and then having to convert your unused foreign currency back to U.S. dollars.

What does all this mean to you? It does not mean you shouldn’t travel abroad, to the contrary.  Traveling abroad can be one of the most exciting and culturally fulfilling vacations you will ever have. It simply means you should use a credit card as much as possible while traveling in a foreign country.  Call your bank ahead of time and let them know the dates and countries you will be in.  This way, they won’t block charges made in those places. 

Using a credit card will help you in numerous ways while traveling abroad.  It will give you added fraud protection, especially for items purchased that require shipping back to the U.S.  The credit card company will insure you in fact get the item, and that it comes undamaged.  If it arrives damaged, or doesn’t come at all, you can always dispute the charge with the credit card company, and they will always take a position that favors you, the consumer, rather than the merchant.  In the event the merchant doesn’t correct the problem, typically within 30 days, the charge can be reversed.  Also, you wont have to carry as much cash.  This will save you a bundle on currency conversion charges. 

Additionally, if your wallet is lost or stolen, you can immediately report this to the credit card company, and no charges that were made by the thief on your credit card will be charged to you.  If cash is lost or stolen, it’s gone, and can never be recovered.  Credit card statements will provide good documentation of your travel related expenses, and certainly if its for business, this comes in handy for tax time.  Finally, you will earn reward points from using your credit card.  Obviously, using cash gives you no such benefit.  Cash back reward programs are among the best, because in essence, this is an additional discount. Also, consider using a travel rewards credit card to accumulate reward points you can use toward purchasing an airline ticket for your next trip abroad.

Most U.S. major credit cards are now accepted worldwide, so you should not have a problem finding vendors willing to accept your card.  Also, most major credit cards can now also be used at ATM machines as well.  So if you do need cash, you can simply withdraw from one of the many ATM machines that are found all over the world.  Typically, you get a better currency conversion rate when using an ATM machine rather than paying the higher fees to a currency conversion establishment. 

There are more and more benefits and rewards being offered to consumers for using a credit card.  Using it responsibly, meaning paying it off in full every month, can yield you some great rewards.  Take advantage of these rewards as much as possible.  But remember; only charge what you know you can afford to pay it off in full on a monthly basis, as most credit card companies charge a very high interest rate for carrying a balance for more than 30 days.

Woody Alpern
CPA/Registered Investment Advisor