One of the essentials while traveling abroad is a sorted payment system. Usually, one carries foreign currency in cash, but an easier and safer mode of payment is credit cards. As much as one would like to be credit card free, it is much easier to carry one card against a wad of foreign currency notes. However, it is important to note that there are charges levied on using credit cards in stores overseas or in an online transaction where the vendor is abroad.
Most Indian credit cards can be used overseas for transactions in stores or online transactions. But making a transaction using a credit card abroad is different from using it in India. Here are a few tips that can be followed while transacting using credit cards abroad.
Tips for using credit cards overseas:
Choosing the right card:
For those who travel abroad often, it is advisable to get a credit card with minimum transaction fees on international transactions. Also, it is convenient to have more than one credit card in the case of a contingency. One must choose a credit card carefully for transaction fees and pay attention to features like rewards that can help balance out the expenditure on transaction charges with their benefits.
One must also memorise the PIN of the credit card, especially of those cards that use PIN and chip technology. In stores that use less sophisticated technology, entering the PIN to authenticate the transaction may be mandatory.
There several specific charges for international transactions such as:
- Foreign Currency conversion charges – The credit balance on the credit card will be in Indian currency. Therefore, using a credit card in a foreign transaction will entail a fee for converting the Indian currency to the foreign currency. Credit cards such as MasterCard and Visa charge 1% to 2% fees on conversion.
- Transaction fees abroad – This fee is charged regardless of the transaction amount, the foreign currency, or the amount of cash withdrawn. It is the charge on the withdrawal of cash. Almost all banks levy it.
- Cash withdrawal – When a credit card is used even in India to withdraw cash, there are charges for it. Therefore, withdrawal using a credit card in a country outside India will prove to be much more expensive because it will include the standard withdrawal fees along with withdrawal fees abroad.
Informing the Credit Card issuer:
If one plans to travel abroad, it is sensible to inform the credit card issuer in advance. In case of emergencies, one can contact the card issuer free of cost. In case of credit card loss or suspicious activity, the issuer will be notified, and the card can be stopped. Some cards even use technology for fraud detection and will know when the cardholder is traveling abroad.
Some credit cards designed for travel offer advantages like insurance on travel, protection from delayed or cancelled flights, lost luggage, using the premium airport lounge, and much more. So, if one can get a credit card that has access to such premium facilities, one should not miss the opportunity to get the welcome drinks, eat at a buffet, or get a quick spa treatment before boarding the flight.
Avoid Dynamic Currency Conversion:
Dynamic currency conversion means using your home currency to make a purchase abroad. It is also called ‘card-holder’s preferred currency’ because it is easier for the cardholder to understand what he is paying, avoiding converting currency. But it is far more expensive than purchasing in the local currency. Therefore, when given a choice for paying in dynamic currency conversion, one must opt-out or go credit card free.
Currency converted at a dynamic rate is must steeper because of a greater number of charges and fees. Also, the credit card statement will reflect the actual charges even though it may seem more convenient to pay in home currency.
For those who travel abroad and use credit cards issued in India to pay for foreign transactions, the main point to consider is to choose the credit card carefully. For example, one may want to apply for a credit card with maximum benefits and minimum transaction fees.
Also, it is very useful and a life-saver if the credit card issuer is informed in advance of the upcoming travel so that immediate help can be sought in case of emergencies. It is not advisable to go credit card free every time because using a credit card is safer than carrying or withdrawing foreign currency notes.