Month: November 2017

Reprinted from FIDELITY VIEWPOINTS – 06/21/2017

Get your credit and debit cards ready for international travel.

Cash may not always be the best bet for much of your spending when traveling internationally. Carrying a wallet full of it can be risky—if your wallet is stolen or lost, the chances of getting your money back are slim.

Using your debit or credit cards can be the safest and most cost-effective way to pay worldwide. It may take some planning ahead though to avoid fees. Whether you pay with a debit card or use a credit card, plan ahead so you don’t end up paying more than necessary.

Paying with local currency

Taking money out of an ATM in a foreign country typically incurs a fee from both the local bank that owns the ATM and your bank at home. So, researching when and how you will be charged fees can pay off. That’s because some debit card providers don’t charge fees for using foreign ATMs—and a few may even reimburse fees charged by the foreign bank. Planning withdrawals in advance can help you minimize any fees that could be charged.

“Try to plan your total local currency needs and withdraw the funds from an ATM in as few transactions as possible, so you reduce the foreign bank servicing fees,” says Sam McLimans, senior vice president of cash management at Fidelity.

Credit cards

Credit cards come with some advantages when traveling—you’re protected against unauthorized charges by federal law in case your card is lost or stolen. The law limits your liability to $50 but many credit card issuers offer zero-liability protection. Plus, purchases made with a credit card typically get a much better exchange rate than you can get from a currency exchange vendor or ATM—because your card issuer offers close to the best rate available as it’s set by the major networks, Visa® and Mastercard®. But, depending on the policies and features of your credit card, you may also pay a fee for the currency conversion. Credit card networks charge the fee to your bank and the cost is generally added to your purchase. Some credit card issuers will pay the currency conversion fee for you, so you may want to shop around for a new credit card before your trip.

There’s another fee to look out for as well: the foreign transaction fee on purchases. The fee is typically 3% of each purchase. That can add up. Shopping around ahead of time for a new card that offers no foreign transaction fees could save you a chunk of money.

Chip and PIN cards have been used in Europe and many Asian countries for years, but they have just started to be widely used in the U.S. Some issuers in the U.S. still require a signature rather than a PIN—those cards are known as chip and signature cards. You were probably recent sent a new card recently with an embedded chip for payment. Using the chip for payment instead of swiping the card makes for a more secure transaction—and it’s pretty much required if you plan to use your card while traveling.

“In Europe, bus or train ticket machines, gas pumps, and vending machines only accept chip cards because it’s so much better at preventing fraud,” McLimans notes. “If your card doesn’t have a chip, ask for a new one with the technology, or get a new credit card with chip technology.”

Key takeaways
✔ Planning how to spend while out of the country can help you save money.
✔ Use debit cards that let you withdraw money with low, or no, fees while traveling.
✔ Consider credit cards that don’t charge a foreign transaction fee.