Mukul loves to travel. Right now he’s busy planning his next vacation. This time instead of exploring India, like he usually does, he plans to visit a foreign country. His budget is set and a plan has been made, but the overseas location is yet to be decided.
Where to go? What to do? What not to do? Where to stay? Thousands of questions are running through his head. He reaches out to his best friend ‘Google’ to get some answers. While searching for information online, one of the suggestions that popped up in his search was, ‘Using a Credit Card abroad’. Curious to find out more, he clicked on it. Here’s what he learned –
Going abroad and using plastic money go hand in hand. And if you use your Credit Card wisely, it could lead to a lot of savings. On the other hand, irresponsible usage could lead to unnecessary fees and other charges. Smart use of a Credit Card can result in a happy vacation. Here’s a list of things you should keep in mind when using your Credit Card abroad.
When using a credit card abroad, usually 2-3% of the billed amount is charged as foreign transaction fee. Therefore, it’s advisable to have a card which waives the foreign-transaction fee or has lower. Otherewise, each time you swipe your card, you will end up pauing 3% above the listed price.
Using your Credit Card at an overseas ATM
Withdrawing money at an ATM abroad may end up costing you. This can be avoided if your card issuing bank has a wide network overseas and a global partnership. Choose a card which does not charge exorbitantly for withdrawing money abroad.
Foreign currency conversion fee
This charge is applicable on currency conversion. When a transaction is made outside India on your domestic Credit Card, a foreign currency conversion charge is applicable for converting the Indian currency into foreign currency.
Currency conversion rate
The currency conversion rate applied to your foreign transactions will be as of the date of settlement between your Credit Card company and the foreign vendor. Because of this, the actual transaction date and settlement date may differ. Remember to refer to the exchange rate on the date of settlement of your transaction when checking your Credit Card bill.
Check all the charges
Generally, there are three charges involved in overseas transactions:
- Foreign Currency Conversion fee – ranges between 3-5%.
- Foreign Transaction charge – ranges between 2-3%.
- Cash Advance charge – ranges between 1-3%.
Make sure you ask about the interest rates and other fees before you leave on your trip. Adequate knowledge of all the charges will help avoid surprises when you finally receive your bill.
Make sure that your Credit Card is accepted worldwide. If it’s not, then apply for a card which is accepted in the country to which you intend to trave. Visa and MasterCard Credit Cards generally have worldwide acceptance.
Insurance offers on your card
Credit Card issuers often offer insurance for travellers, such as accident insurance, theft insurance, etc. These offers usually come free with the card so talk to your bank before you leave on your trip to get all the information. In case there are costs attached to the offers, do a cost-benefit analysis. Opt for a card that has offers on cards designed for travellers.
Additional reading: Learn about Travel Insurance
If your card gets lost while you are travelling, a call to your Credit Card issuer can help. Before you leave, get in touch with your bank and inform them about your foreign trip, along with your travel dates. Ask them for a number you can call, in case something happens to your card. This will also prevent your Credit Card issuer from getting confused between genuine and suspicious transactions.
Travelling abroad with plastic money is easier and more advisable than carrying cash. Choosing the right card as well, is always an intelligent move. Avoid Credit Cards with high fees and charges and look for rewards points and freebies, if any. For travel lovers, choosing an Airline Credit Card is always a good option. And finally, remember to read all the terms and conditions before accepting the Credit Card.