Editor’s Note: This article was written by Odysseas Papadimitriou from Card Hub, an Internet web site which helps consumers find the best credit cards.
We all know how confusing, frustrating, nonsensical, and costly the travel industry can be. It’s as if it’s first cousins with the credit card industry. The thing is we also know how many opportunities there are to game the system and save. This is perhaps most important when it comes to international travel, as everything is more costly, and logistics not common to domestic travel (think currency conversion) come into play. With that being said, there are a few things that international travelers can do (in addition to getting the best deals) to realize savings of 25 percent or more — and it all starts with a bit of old-fashioned planning.
Before You Leave
You’re going to need a no foreign transaction fee credit card, and you’re going to need one before you make any hotel, airline, or day-trip reservations related to your venture out of the country. More than 90 percent of all credit cards assess fees for international usage, you see, and while you might assume that they apply only when you’re actually on foreign soil, the truth is that they affect any purchase made through a foreign-based company. It’s therefore important that you pull out your wallet and call the number on the back of your credit card to see if you’re good to go or not.
If you’re going to need a new credit card, it truly pays to find out sooner rather than later. Having excellent credit and a few months before you depart gives you plenty of time to apply for a no foreign fee card offering an initial bonus lucrative enough to pay for a large portion of your travel costs by itself. For example, the Chase Sapphire Preferred Credit Card offers 50,000 bonus points to new cardholders who charge at least $3,000 during the first three months. Those points can be redeemed for either $400 in cash or $500 in travel booked through Chase. If you assume that a week in Europe would cost around $4,000 for a couple, that’s an additional 10-12.5 percent in savings right there.
But, hold on: what if you’re just planning on trading in some cash and leaving the plastic at home?
There’s a simple reason: You’ll get a much better deal on currency conversion with a credit card. According to this Card Hub study, Visa and MasterCard offer exchange rates that are 16 percent lower than those charged by Travelex and 8 percent lower than the average bank charges for converting cash. Plus, the conversion is done automatically when you make a purchase, which means you’ll have one less errand to run in the hectic days leading up to departure.
By the way, I’m not overlooking the fact that you’ll need cash for certain overseas expenses. That’s what a debit card with low fees for international ATM withdrawals is for. Having one will not only allow you to take advantage of the low Visa and MasterCard exchange rates, but will also enable you to withdraw cash on demand and limit the money you carry around at any given time.
As long as you make sure to tell your card issuers that you’re leaving (so they don’t suspend your card when suspicious overseas transactions start to appear), you’ll be well-positioned to save heading into your trip.
After You Arrive
When finally abroad, your main concern should be enjoying yourself and experiencing as much as possible. Don’t let your guard down completely, though, or the savings you provided for before leaving could get somewhat depleted.
Foreign merchants have a reputation for asking US consumers if they’d like purchase totals converted into dollars. Don’t mistake this for kindness, as it’s actually just a sneaky way for them to use a decidedly unfavorable exchange rate in making the conversion so they can pocket a bit more profit. The best defense against this practice is to always say no to such offers and insist on only signing checks expressed in the local currency. If you’d feel more comfortable shopping with dollars in mind, just bring a pocket calculator or a cell phone.
If there’s one upside to the turbulence experienced by the world economy in recent years, it’s the fact that certain popular tourist destinations (like my home country of Greece) are much cheaper to visit than before. That means it’s actually a pretty good time to grab your passport and say bon voyage to the States. Just remember the tips laid out above, and you’ll have a happy bank account waiting for you when you return.
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