Those of you who are lucky enough to be planning an international vacation for this summer will be happy to hear that you can save big time by simply using a credit card. Not only will you save time by avoiding the trek down to the local bank or Travelex location to get some foreign dough, but you’ll also save yourself from overspending by as much as 15.5%.
CardHub’s 2013 Currency Conversion Study found that Visa and MasterCard use substantially lower exchange rates than both Travelex and the average major bank. Vacationers who use credit cards without international fees to make the majority of their trip-related expenses will therefore save 15.5% relative to travelers who exchange physical currency at Travelex and 7.2% compared to major bank patrons.
Of the more than three-quarters of people who say they’ll take a vacation this summer, according to a recent Orbitz.com survey, 68% plan to spend more than $1,500 and 25% anticipate shelling out over $2,500. There’s no reason why you should tack a few hundred extra dollars onto those already steep tabs.
There are other benefits to using plastic too. First of all, for those of you who aren’t quite sure how currency conversion works with a credit card, it’s done automatically when the card is swiped. You don’t have to do anything special. Credit card companies all have $0 liability policies as well. That means if you somehow misplace your card, you won’t be charged for unauthorized purchases made with it. In fact, pickpockets won’t really be a threat at all since you aren’t going to be walking around with large amounts of cash and you’ll be able to rectify a lost card situation by simply calling your bank collect for an emergency replacement.
It’s not all peachy, though. There are a few things you’ll need to do in order to avoid spending-related hiccups on your trip abroad.
- Make sure you have a low-fee debit card too: Armed with a debit card that charges low fees for international ATM withdrawals, you’ll be able to take advantage of the low Visa/MasterCard exchange rate and withdraw cash as needed to pay for things like local transportation.
- Tell your bank you’re leaving: If you don’t tell your card issuers about your travel plans – which countries you’ll be visiting and the dates you’ll be gone – your accounts may be suspended due to suspicions of fraud.
- Pay in the local currency: Foreign merchants are known for offering to convert purchase totals into U.S. dollars under the guise of helping American travelers struggling to do mental math. Oftentimes, this is just a rouse to charge exorbitant exchange rates and increase profits, so pay in the native currency and bring along a pocket calculator or phone if need be.
- Don’t bother with chip cards: You might have heard that you need a credit card with a special computer chip embedded inside in order to use plastic overseas. That’s not true. Many international credit cards are indeed chip-based, but most merchants will accept U.S. magnetic stripe cards. Besides, most of the chip cards available to U.S. consumers are chip-and-signature cards, not the chip-and-PIN cards that would actually benefit you abroad.
As long as you follow these rules of thumb, I bet you’ll be pleasantly surprised by your post-vacation bill.
This article is from Odysseas Papadimitriou, who is the CEO of CardHub.com, a website that helps consumers find the right credit card for their needs.