Aug 10, 2012

Choosing the Best Travel Credit Card

If you have travelled abroad recently, or plan to in the near future, you may have been advised to use your credit card rather than bringing large sums of cash. It is true that travellers are often targeted by criminals and pickpockets, and travelling with small sums of cash provides added security and peace of mind during your trip. In addition to this, using your credit card abroad allows you to avail of the interbank exchange rate, which is generally far more generous than standard foreign currency exchange rates available from your local bank. Unfortunately, many credit cards and card providers have taken to charging an additional foreign transaction fee that can range from 1% to 4%. When you think of the accumulated cost of accommodation, travel and spending money, these foreign transaction fees can quickly add up.

The Cost of Using a Credit Card Abroad

As mentioned above, using your credit card abroad can often incur foreign transaction fees. These are a percentage of all spending processed through an overseas merchant. It is also worth noting that you can be charged this fee anytime you buy through an overseas merchant, which could include buying something online. Generally, if you are quoted a price in a foreign currency, you are liable for foreign transaction fees. In addition to this foreign transaction fee, withdrawing cash from an ATM when abroad can also be costly, and the rate applied to cash advances should be considered.

Other costs that should be considered are not obvious ones, but secondary costs. Some credit cards offer a level of built in travel insurance and concierge services when travelling, and these are costs that you would otherwise have to pay for if your credit card did not provide them. Another option that credit card can offer you – when traveling abroad, you may be complete your purchase in US dollars rather than the local currency. This practice is called Dynamic Currency Conversion, and you would be well advised to refrain from using it. While knowing the US dollar price there and then can be convenient, the charge on this conversion can be as high as 7% – far in excess of standard fees.

What are the Best Travel Credit Cards?

There are many different credit cards that offer a range of benefits for travellers. Travellers who do not plan to use their card much when abroad might be more concerned about a frequent flyer rewards program that will save them money on the cost of their flights or accommodation. In this case, the Venture Rewards Credit Card from Capital One might be attractive to you. This card offers 2 miles for every dollar spent, and if you spend $1,000 in your first three months you qualify for a bonus of 10,000 miles. Straight off the bat, those miles could be worth $120 in saved costs. Capital One is extremely popular amongst travellers as none of their cards incorporate foreign transaction fees, and because they are issued through Visa and MasterCard they are widely accepted throughout the world. The Capital One Venture Rewards Card also includes car insurance when you rent a car abroad using your card, and travel accident insurance at no extra cost (these benefits are offered by Master Card payment system for all credit cards, issued in USA ). These are all savings that quickly add up.

Chase is another credit card provider that offers many favourable travel credit cards. The Chase Marriott Rewards Premier Visa Signature Card has no foreign transaction fees, and includes a massive 50,000 bonus points after your first use. These bonus points can be redeemed through the Marriott Rewards program, and points can quickly be accumulated and built up for use towards further holidays. The Chase Marriott Rewards Premier Visa Signature Card has a cash advance fee of 4%, which does not compare favourably to the Capital One Venture Rewards card above (3%), but the rewards are also different and individuals will find greater savings dependent on their particular needs.

Discover cards, such as the Discover More credit card, also do not charge foreign transaction fees.  The Discover More Card allows users to get 5% cash back on certain purchases that change throughout the year, and 1% on all other purchases. This cash back can be used to fund your vacation safe in the knowledge that you won’t have to pay to use your card when abroad. The only restriction with a Discover card is that they are not as widely accepted as Visa or MasterCard, and you should make sure that there will be no acceptance issues before you travel.

How do I Find the Best Credit Card for Travel?

Like choosing a normal credit card, choosing the best travel credit card is not as simple as finding one with no foreign transaction fees. There are many other factors that warrant consideration such as overall interest rate (which may be a factor if you will be paying off your holiday spending over a significant period of time), reward schemes that can complement your vacation and auxiliary services like concierge services and inclusive insurances. The first step is finding a foreign transaction fee free card, and after that it is a case of comparing and contrasting the various pros and cons of each card to find the one that will work best for you. There is no doubt that millions of travellers are paying unnecessary fees that could easily be avoided. Don’t become one of them; find a travel credit card for yourself today.

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