Skiing on Swiss slopes, ziplining in Costa Rica and chowing down on pizza al fresco-style on Rome’s cobblestone streets are the kind of swoon-worthy travels that are all about the experience. But the reality is they’re made possible with what’s in your wallet. And if you’re not careful with how you pay, you may end up losing out on more than savings.
According to the U.S. Department of Commerce’s Office of Travel and Tourism Industries, more than 61 million Americans travel beyond the nation’s borders annually. And on average, travelers spend a whopping $2,708 each on their foreign trips. After all, they’re paying a daily premium to experience the food, entertainment, transportation and lodging offered by their exotic locale.
The Office of Travel and Tourism Industries also reports that approximately 52 percent of travelers use credit cards. That leaves close to half of travelers hassling between debit, coins, cash and checks.
And these payment methods are vulnerable to theft, underscoring the need for credit cards. A TripAdvisor report reveals that the prime pickpocket cities are all in Europe—with Barcelona, Rome and Paris rounding out the top three spots.
“We insure thousands of international travelers,” says Adam Bates, vice president of Insurance Services of America. “We highly recommend using a credit card instead of a debit card.”
Experts suggest that credit cards should be your primary payment method abroad, not only to save you money, but keep safe the money that you do have.
The Big Deal with Credit Cards Abroad
The same perks that make you want to swipe plastic in your hometown transactions hold true for foreign travel. With the safety net of a financial institution to back your purchases, there’s less risk of losing out in worst-case travel scenarios, like theft or fraud.
In fact, a majority of credit cards offer comprehensive fraud and loss protection.
“Carrying cash is dangerous,” says Matthew Goldman, CEO and co-founder of Wallaby Financial. “If you lose it you can’t get it back. Credit cards usually come with expedited replacement service sent by something like FedEx. It may cost extra, but it’s better than being stuck.”
Goldman adds that credit card companies also extend their abroad services to customer service support through affiliated bank branches, and American Express even has locations spread throughout the world in case of card loss or other issues.
But using credit cards abroad can save you money in other ways. According to budget travel expert and author Matt Kepnes of the Nomadic Matt website, plastic can get you the best exchange rates. A better exchange rate means that you’ll stay closer to the value of a dollar, which will allow you to get the most out of what you have to spend.
“The rate you get converting your foreign currency back into dollars is always the closer to the official rate than ATMs, using cash, or exchanging money,” Kepnes says. “Whenever possible, I use my credit card.”
Credit card perks can also extend beyond the value of a dollar with insurance to provide an extra layer of peace of mind when traveling.
“If you make your travel purchases with your credit card you will often be awarded benefits like travel insurance which can be super helpful for lost bags, sickness, bad weather et cetera,” says Ben Crosky of SolYoga travel company.
While credit card travel insurance means you may get reimbursed for missing luggage or a broken ankle, you must be sure to charge your travel expenses to the card in order to be covered.
What to Look for in a Jet Setting Credit Card
No two trips abroad are alike, so travelers will need to individually determine which rewards programs help stretch their dollars farthest. However, there are two essentials that every globetrotter should look for in their travel card: no foreign transaction fees and wide network acceptance.
A Pew Trusts study found that up to 90 percent of credit cards on the market have foreign transaction fees, which cost about 2 to 3 percent of the overall purchase. On top of that, travelers must contend with exchange rates. Depending on the country, a steep rate means even less value for every dollar spent.
“Foreign transaction fees can add up really rapidly when you’re charging everything,” Goldman says.
The ability to use your card in more places becomes a handy travel companion feature as well. While an American Express or Discover card may boast the kind of rewards perks and customer service designed to meet a traveler’s needs, these factors become null and void when a merchant can’t swipe it.
“I try to get a Visa or MasterCard as they are more widely accepted,” Kepnes advises.
While identifying the importance of using credit and pinpointing the best credit card features will help ensure savings, they’re just one small part of the picture.
Stay tuned next week for part 2 of our smart guide, with expert credit card foreign travel tips on how to use existing credit card rewards. Plus you’ll learn what every jetsetter needs on their credit card preparation checklist.