If you’re planning to brave foreign waters soon, you should have your passport, know the currency exchange rate, speak a bit of their language, and have a credit card that can handle emergency purchases overseas.
Many consumers embark on overseas travels and forget about having an important overseas credit card. Credit cards from American-based institutions will still work overseas, but it may come at a fee to you. Many credit cards have a foreign exchange fee that is three percent of your total purchase. This fee is tacked on to your monthly balance. Capital One has a variety of credit cards that come without a foreign transaction fee. In addition to foreign transaction fees, traveling overseas with an American-based credit card can be an issue due to the type of credit cards that European and other banks overseas use.
These banks use Chip and PIN type credit cards. These cards are smarter than the traditional magnetic-stripe based credit card. And if you are within your credit limit and all is well with your bank account, you can still be denied.
European-based credit cards have a small microchip placed within in them. The machines that read these cards, read the microchips and then require the cardholder to put in their four-digit pin number, much like an American ATM. Our system still needs to be upgraded, and you can be down and out if you don’t have cash at a European gas stations, vending machines and train stations.
The Europeans’ system was implemented for its added security benefits. It’s much harder to steal a credit card and make unauthorized payments, because of the microchip and PIN verification tactics. If you’re an American overseas, don’t fret. It’s not that bad. You can still pay for the items in your shopping cart by merely asking the attendant to swipe your card rather than paying at the pump or other outdoor terminals. Also, carry a little more cash than you would normally carry. Remember to keep it in different locations, as cash is a very high liability. All kiosks and terminals accept cash, and all currency converting stations know how to convert the American dollar.
Yet another option would be to get a prepaid cash card that is equipped with the Chip and PIN system. An example of a card of this type is the Cash Passport by Travelex. The downside with this card, as with many prepaid credit cards, is that there are a bunch of extraneous fees for putting the money on the card, ATM withdrawals and high exchange rates. There are some American banks that are up with the times – Chase has a Chip and PIN credit card called the Palladium credit card. The average consumer isn’t rushing to sign up for this card though, as the annual fee is $595 and crafted out of 23k gold. Wells Fargo repeatedly has some Chip and PIN cards in the works as well.
