A credit card is regarded as a convenient financial product that can be used for everyday purchases without any flow of cash. In this, credit is provided to the customer that needs to be paid at a timely interval of time. This has been widely used by individuals and businesses as it helps in improving the credit score as well.
A credit card can be used anywhere if accepted. We can take our credit card and use it while traveling abroad. But the question that arises is whether we should use credit cards while traveling abroad or not. While traveling, we always need some cash. Using credit cards primarily for all the transactions overseas may prove out to be simple and convenient.
By using the credit card, one would hardly need to deal and struggle for currency conversion, and one possibly gets the lowest conversion rates possible. Not only this, it’s easy and convenient to hide credit cards rather than a bundle of money, which is more susceptible to pickpockets, etc; whereas a stolen credit card is of no use unless we have access to its pin or password.
Together we might be thinking that the use of a credit card might be a good decision but the cost of using a credit card overseas is much higher than our expectation, and one needs to critically analyze the different factors responsible while using the credit card overseas.
This is an important perspective as it critically describes the use and role of credit cards. This eventually is described by the following factors:
Foreign Transaction Fee:
According to the study conducted by The Pew Charitable Trust, it was found that 91% of bank cards and 57% of credit union cards have transaction fees for the payments made abroad. These payments cover about 2-3% of the purchase and can have a significant effect on the consecutive payments.
Hence, before traveling or using the credit card, one needs to check whether the credit card allotted by the company provides free transaction fee payments or not. If the answer is yes, then it may act as a boon and may help a lot while traveling abroad.
But at the same, this is something that may hardly exist. So, one needs to be cautious, prepared and read through all the terms and conditions of credit card usage.
Dynamic Currency Conversion:
While you travel from one country to another, we find that both countries may differ from the currencies used in the countries. So, while making a payment or doing any sort of transaction, there are chances of dynamic currency conversion.
A Case In Which We Get Less Than What We Actually Deserve
Consider the fact that during the withdrawal process, we get less than the standard prices, and similarly while paying, we have to pay an amount greater than the standard prices. The difference between both the amounts makes a huge difference.
Foreign merchants generally take advantage by quoting the final price in U.S. dollars and then unbeknownst the tourists by offering an uncompetitive exchange rate. This is something that’s generally misleading and one can avoid it by being more cautious or simply avoiding the use of credit cards while traveling abroad.
Security Concern And Fraud Issues:
At times, it is found that the credit cards used overseas have a chance of getting their information leaked. It’s better to save money by being cautious or switching to a safer and convenient mode of payment.
With the institution of chip-and-pin technology, European credit cards have surpassed the U.S. credit cards in terms of fraud security.
The cards used in the United States of America use the less-sophisticated magnetic stripe system, which is no longer trusted abroad. As a result of this, a lot of foreign merchants do not accept the credit card if there isn’t a proper identification. In all, it tolls to security concern and one would face difficulty in using the card as all the merchants won’t accept it. So, relying on using the credit card for purchasing abroad is quite risky and one should have other payment source as a substitute.
At a point, one would find overseas travel to be both confusing and expensive. There are different ways to minimize the cost and have a hassle-free trip.
As long as we have a transaction fee free credit card, the abroad trip can be better and one just needs to notify the credit card provider and then enjoy the credit card without bearing any extra transaction fee. This is a very important aspect. Otherwise one may be shocked by unbelievable taxes added in the passbook.
Moreover, traveling overseas and bounded within the worries of getting proper conversion is something that only ruins the mood of the visitor. Thus, one needs to be cautious and opt for a substitute rather than relying on the credit card for overseas transactions.
In all, we will find that the use of a credit card while traveling abroad may seem to be tempting. But as we imply things in practical life and use the credit card for transactions abroad. We will find that the use of credit card acts like a pain in the form of add-on charges, poor conversion rate, and together facing the security issues as well.
So in order to avoid such a situation, one can easily opt out of using credit cards and start using cash for making different purchases and transactions.