Credit Cards and Travel

I find that credit cards provide me with several advantages when I travel to Europe. First, by using a credit card, I need fewer Euros, which allows me to get away with purchasing less foreign currency, which in turn reduces the risk that I get stuck with a lot of Euros at the end of my trip. Second, credit cards give me much better exchange rates than I get at a bank when I exchange currency. Credit cards give you the exchange rate that you see posted when you look it up online or in the newspaper. This rate is a much better than U.S. banks will give you when you are buying foreign currency before your trip. In the U.S., when I buy Euros, I typically pay 6 cents more per Euro than the posted rate.

The relevant choice is not whether you should bring a credit card with you when you travel — you should bring one. Rather, the important choice is which card to bring. Many credit cards charge international transaction fees. These cards tack on somewhere between one and three percent extra in fees for all of your international purchases. These extra fees could easily add up to $100 or more and they are expenses that are easy to avoid.

Several months before you travel, you should check to see if your credit card charges international transaction fees. If it does, you should consider getting a credit card that does not have such a fee. Personally, I like the CapitalOne credit cards because their cards do not have international transaction fees. I also like their cards because they give me the posted exchange rate on my purchases, which is the best exchange rate that anyone can get.

Credit cards are such a useful tool when you travel that it can be devastating to travelers who lose them by getting their pockets picked. In much of Europe, and definitely in Italy, there is less violent crime than we have in the U.S. However, petty crimes, like being robbed by a pickpocket, are more prevalent.

To guard against credit card theft, I take a few precautions when I travel. First, I bring more than one credit card. This way if one card is stolen, I can use a different card for the rest of my trip. Second, I keep one credit card on me, usually in my money belt, and I keep the second card at my lodging. Keeping credit cards (and your passport) in your hotel room or in your apartment keeps these items more secure than if you were carrying them on your person. In addition, the credit cards are in two different places, so you are unlikely to have both cards taken from you. Finally, I write down my credit card numbers, the customer service phone numbers for the cards, and the balance of my last statement. You will need all of this information to freeze your account should your card be stolen.

Credit cards make international travel much easier. However, it pays to make sure you have a card without international transaction fees and that you take the appropriate precautions to guard against and prepare for your card being stolen.

Joe McGarrity is a Professor of Economics at UCA, and he can be reached at joem@uca.edu.