By financen | October 15, 2011 - 1:43 pm - Posted in Credit Card

For many years, using a credit card while travelling abroad carried with it a couple unfortunate side effects: you could expect to see expensive transaction fees, not to mention a tacked-on exchange rate. But even so, American travelers knew that their cards would be accepted. The major card providers (Visa, MasterCard, etc.) are prevalent in population centers around the world, and being able to rely on your card saves considerable hassle, even though a fee will likely be included.

These days, though, American credit cards often don’t work overseas, due to a relatively new technology called chip-and-PIN. The technology stores all of a card’s information in a microchip, rather than in a magnetic strip on the side, which ultimately makes information more secure. The U.S., unfortunately, has not yet switched over to the new system. American credit card companies have been working to make the switch to microchips, but the process has been a slow one.

In the meantime, what should you do when traveling abroad? If all your cards have the magnetic strip, and if you prefer having a credit card to make purchases, then getting a prepaid travel card might be your best option. It works just like debit cards and Prepaid Cell Phones, but it is specifically set up for international use. While the card will carry high fees, it probably won’t be much different from using a credit card. Many major credit card providers offer this service.

Other options include cash, debit cards, and traveler’s checks, and all have their pros and cons. Cash is the most convenient option, and it is usually the cheapest, although there’s no recourse against stolen cash and many people feel uncomfortable carrying around large amounts of currency. Debit cards and traveler’s checks are safer options, but they often involve higher fees and are not accepted in many places.

Ultimately, if you’re planning to travel, it’s important to be aware of your spending options before you go and to plan accordingly. Most travelers will rely on a combination of cash, credit, and other payment methods. But a new and important step to take – even if high fees don’t phase you – is to check the encryption method of your credit card.

This entry was posted on Saturday, October 15th, 2011 at 1:43 pm and is filed under Credit Card. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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