Credit cards are a useful tool when it comes to managing your money, and they can be especially helpful when you’re traveling. But as with any financial instrument, there are certain best practices you should follow when using your credit card while on your next vacation.
10 Tips for Using Your Credit Card on Vacation
In this article, we’ll share 10 tips for using your credit card effectively when traveling. Whether you’re just starting out or an experienced traveler, these tips will help improve your trip!
1. Check That You Have Enough Credit
It would be a shame to try to pay for something only to realize you don’t have enough credit. Make sure you have enough credit on your card for the purchases you plan to make. This will ensure that your transactions go through smoothly and easily, without any worries or hassle.
If you’re approaching your limit, think about taking the steps to reduce your debt. You could also sign up for another credit card or loan but only do this if you’re financially responsible.
2. Get a Travel-Specific Credit Card
Consider getting a travel-specific credit card with rewards programs and other perks that can help save you money while on the road. Some cards even offer free hotel stays or airline miles, making them well worth the time to sign up for! But take the time to consider your options.
Some travel credit cards will only offer rewards after you hit a high spending ceiling, while others incur smaller rewards over time. Consider your budget when choosing the card for your travels.
3. Notify Your Bank That You’re Traveling
Before leaving home, notify your bank or credit card company of where you’ll be traveling so they don’t flag any unusual activity as suspicious. While being locked out of your card can be annoying, be glad that banks put this system in place to cut down on actual card theft.
If you already use online banking, there should be a travel notice you can fill out. Simply enter your destination and length of trip to activate it. If you’re traveling around Europe or across multiple countries, you can specify the number of destinations and your travel dates.
4. Spread Out Purchases Across Cards
If possible, try to spread out large purchases across multiple cards. This can help minimize the impact of fraud or theft if one of those cards is compromised during travel. If you already have a credit card, it’s way easier to get another. Consider applying for a second one before the trip.
However, if you can’t get an unsecured credit card, you can always get a secured one in a matter of minutes. Just apply online at a trusted bank to get yours in the mail within a week.
5. Convert Your Currency to a Local Currency
Depending on your bank and credit card, you may be able to open an account in a foreign currency before your trip. For example, it’s easy for US citizens to open a Canadian currency account at any American bank because the two countries have a close working relationship.
With that said, Americans don’t have to worry too much about poor exchange rates, as they almost always gain more money in the foreign currency. What you’ll need to worry about is going back into USD, so you may want to wait until the foreign currency is doing well.
6. Be Aware of Any Foreign Transaction Fees
When making purchases abroad, it’s a good idea to use local currency rather than US dollars, but how does this translate to a credit card? When you make a local purchase with a credit card, your bank will still exchange it into their currency but will take an extra 2-3% as a fee.
For this reason, you should be aware of any foreign transaction fees associated with using a non-local debit/credit card in another country. These can really add up if not accounted for in advance! In the end, it’s easier to exchange all of your money before taking your vacation.
7. Keep Track of Your Statements and Bills
Always keep track of your credit card statements and bills, and make sure that you’re paying off the balance in full each month. This will help you maintain a good credit score while avoiding any nasty surprises when returning home. Not only that, but it’ll help you avoid identity theft.
According to the FBI, more than 100,000 cases of identity theft and personal data theft occur every single year. To make sure this number doesn’t rise, pay attention to your statements.
8. Only Shop at Secure Websites or Vendors
When in a foreign country, you have to be wary of who and where you’re buying from. Make sure to use secure websites or vendors when making purchases online. Only use chip-enabled cards with merchants when shopping in person to ensure extra security for your transactions.
As a positive, many travel credit cards come with insurance that will refund your money if your details are compromised. Still, it’s better to avoid that scenario to avoid travel hangups.
9. Set Up (and Stick to) a Travel Budget
Consider setting up a travel budget before leaving on your trip. This can help keep track of how much you’re spending and avoid any overspending that could lead to issues down the line. Don’t splurge because you’re “on vacation.” You’ll need to get back to your life eventually.
If you want to prevent any thoughtless purchases, put a cap on your spending via your online banking app. If you try to spend above that limit, your card will automatically get declined.
10. Understand Credit Card Regulations
Finally, be mindful of the fact that many countries have different regulations regarding what types of transactions are allowed with foreign debit/credit cards. It’s always best to double-check before attempting any large purchases abroad, or you may have to walk around with cash.
As a positive, there’s a high chance that your country of choice will accept Visa and Mastercard at most vendors. That may not be the case with country-specific cards like American Express.