Leveraging your credit card for overseas travel: Advantages and safeguards

This article is in partnership with Crown Currency Exchange.

Utilising a credit card for your expenditure needs abroad can considerably streamline your travel experience. It bypasses the complications of currency conversion and, with the right choice of card, can eliminate unnecessary foreign transaction fees.

The risk of becoming a victim of pickpockets is reduced, not only due to the ease of concealing credit cards but also because any stolen card can be reported immediately, thereby nullifying your liability for any unauthorised transactions.

However, using a credit card does not, by default, lead to cost-effective overseas spending. By adhering to the following four strategies prior to and during your journey, you can actualise this objective.

Many credit card companies may tack on additional fees for purchases made with foreign merchants during your overseas travel. These can range from 1 per cent to 3 per cent of your total purchase value, which means your dream souvenir or meal might come with an unexpected cost. These little extras can add up and might leave you with a larger bill than you anticipated.

So, before you pack your bags, take a moment to read through your credit and debit card agreements. Check if they have extra charges for such transactions. If they do, consider applying for a credit card that doesn't levy foreign transaction fees. Also, scout for a debit card that won't penalise you for ATM withdrawals abroad. Just remember to apply early enough to get your new card in time for your journey.

Once you've got the right cards in your wallet, it's a smart move to give your card provider a heads-up about your travel plans. This is a simple way to prevent any surprise "fraudulent activity" alerts that could freeze your card at a really inconvenient time. While you're at it, ask them for a number you can dial to collect if you need assistance while you're globetrotting. This means you can get in touch without racking up a hefty phone bill.

It's worth noting that some card companies use savvy fraud detection tech that adjusts to your travel habits, so you may not need to inform them of every trip. But they do suggest keeping your contact details up-to-date in case they need to reach out while you're on the road. It's always a good idea to double-check with your card company before you head off so you know where you stand.

Let's talk about dynamic currency conversion for a second. You know when you're shopping in a foreign country, and you're about to pay with your credit card - suddenly, the merchant offers to convert the price into your home currency? That's dynamic currency conversion.

It might seem helpful, especially when you're mentally juggling exchange rates and just want to know what you're spending in good old US dollars. However, there's a catch. These merchants might play around with the exchange rate and not in your favour. So, that seemingly convenient conversion could end up costing you more.

How do you avoid being a sitting duck for this crafty trick? Stick to the local currency. Whenever you're presented with a receipt or check, make sure it's in the local currency before you sign. This simple step can save you from unnecessary costs that could make a dent in your travel budget.

In Sydney, Crown currency exchange offers competitive exchange rates and has multiple locations throughout the city, making it a convenient option for exchanging cash. In Tokyo, you can easily find ATMs that accept international cards at major banks and airports.

However, it's always recommended to have some local currency on hand for smaller establishments that may not accept credit cards. Therefore, it's essential to plan and budget accordingly when deciding on how much cash to bring.

In the era of chip-and-PIN technology, you may often find that credit card terminals, particularly in Europe, necessitate you as the cardholder to punch in a Personal Identification Number (PIN). It's, therefore, crucial that you set one up and commit it to memory before hitting the road.

On the flip side, some merchants in certain countries might still operate with the outdated magnetic stripe system. Consequently, they might refuse your credit card if you can't provide the appropriate identification. But don't fret; as long as you have your passport at hand, you should be good to go. The merchants are just looking for assurance that the person using the credit card is the rightful owner.

Using a credit card for overseas travel can be advantageous if you plan ahead and make informed choices. Opt for a card that waives foreign transaction fees, inform your provider of your travel plans, avoid dynamic currency conversion traps, and ensure you have your PIN memorised.

These safeguards will not only save you money but also give you peace of mind while exploring new places. With the right credit card, you can focus on making unforgettable memories instead of worrying about foreign currency and transaction fees.