Holiday Season Means Your Credit Card Will Be Working. Is It Healthy?

July 20th, 2011

Don’t be left cashless because your credit card fails
Nothing, but nothing will ruin your vacation like having your credit card rejected. Your kids will cry. Your wife will shout and the bartender will take your beer away.
There are 2 reasons your credit card may not work:

Fraud
Your credit card company suspects fraud. Credit card companies use sophisticated software to detect deviations from your normal spending patterns, such as a series of large purchases in exotic locales. Before you leave, call your credit card issuer. Ask the customer service representative to put a note on your account explaining where you’re going and when you’ll return. And it’s not a bad idea to carry an extra credit card, just in case the message doesn’t get through.

Microchip
Your card doesn’t contain a microchip. In the past few years, banks in Europe and other parts of the world have switched to credit cards with an embedded microchip.

In the US the majority of credit cards still have a magnetic stripe on the back and only require a signature. Hotels and restaurants in Europe will accept magnetic signature cards, as will most retailers. You may hit problems at automated systems. To avoid hassles, pay for train tickets and other purchases online before you go. Carry a back-up supply of local currency to use at tolls, parking lots and metro stations.

Keep costs down
Traveling overseas may expand your mind, but unless you’re careful, it will shrink your bank account. At current exchange rates, a café au lait at a charming cafe in Paris could end up costing you $15.

Currency exchange
Try and avoid credit card currency exchange fees. Visa and MasterCard charge a standard 1% for foreign purchases, and many banks tack on their own conversion fees. For some credit cards, the combined currency exchange fee is 3%. Plan ahead. Capital One doesn’t charge conversion fees for any of its cards, and absorbs the Visa and MasterCard fee. Some cards offered by American Express, Citi and Chase also waive currency conversion fees.

Apply for another card
If you don’t have a credit card that waives currency exchange fees, consider applying for one before you travel. An added benefit: Many credit card issuers are offering generous rewards to new applicants with excellent credit. Capital One Venture Rewards, for example, is offering 25,000 bonus airline miles to new card holders. When you apply for a new credit card, you authorize the issuer to check your credit report. That inquiry can ding your credit score. If you already have stellar credit, one inquiry won’t make much of a difference. But if you have shaky credit and plan to buy a house or a car in the next few months, think before you apply for a new credit card.

Card insurance
Finally, check the terms of your credit card’s insurance coverage before you leave for your trip. Most credit cards provide rental car insurance, but that may not apply in some foreign countries.

Travel insurance
If you buy travel insurance make sure you’re not duplicating coverage you already have. Some premium credit cards offer trip-cancellation insurance as long as you purchase your tickets with their credit card.

This entry was posted on Wednesday, July 20th, 2011 at 8:19 am and is filed under Business, Credit Cards, Economy, Finance, Money, Personal / Internet. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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