We all know that there’s a plethora of credit cards out there from which to choose, yet despite how simple getting a good travel credit card may appear to be, the truth is that choosing the wrong one might cost you very dearly. Why? The answer is as simple as it is scary: fees. And not only that, you might be loosing free flights and other bonuses. With your permission let me guide you through this obscure world, and hopefully you’ll be seeing a light at the end of the tunnel by the time you’re done with this article.
Watch Our For Credit Card Fees
When choosing a credit card to take on a trip overseas, you need to check how much the card provider is going to charge you to use it while you are traveling. Some providers levy extortionate foreign conversion charges for using your card (and may even stop your card if you don’t inform them in any advance that you will be using it overseas), with charges typically starting from around three per cent of each transaction that you make with the card while traveling overseas- this can add up to hundreds of dollars when traveling long term. The best way to get around this is to carry a debit card that you will use to withdraw local money, thus only being charged the local bank fee (if there is one) and not the cash advance plus exchange rate fee, or to buy everything online via the U.S. version of the site to avoid being charged. There are however a few no foreign transaction fees credit cards – Capital One, the Chase British Airways card and Discover, for example- although they may limit the period you can do so or charge you more for withdrawals from ATM’s. If you’re going to get a Credit Card, I’d get one of these.
If you are traveling in Europe or North America, another option is to take out a pre-paid foreign exchange card rather than a debit or credit card. These allow you to top up before you go and offer a much better exchange rate than a bank or bureau de change. You can also top them up online or by phone when you are overseas. Leading providers of pre-paid foreign exchange cards include Caxton FX and Fair FX.
And what about annual fees? Branded credit cards usually charge between 50-100 USD in annual fees, but there are some that do not have them. What’s the catch? Cards that have fees usually offer more points per mileage and other advantages, thus allowing you to use your rewards sooner. If you’re going to travel a lot odds are that you will actually save more money with one of these than the cost of the annual fee.
Another thing to check is what reward schemes are associated with your credit card, for example one air mile per dollar spent on the card or points that you can redeem against future purchases. Good airline miles credit cards will give you extra points when you shop at specific retailers, or, if it is a branded credit card, with a particular brand. Don’t however spend more than you otherwise would on the card to build up air miles or reward points as this will end up costing you more than you gain, but try to get more than one point per dollar when possible!
Sign up bonuses
Most travel credit cards offer huge bonuses for signing up, equal to at least one domestic travel flight within the U.S., sometimes even more. The American AAdvantage card offers 25,000 miles just for joining, United Airlines gives you 30,000 miles for signing up and Delta offers miles and elite status miles when you sign up. I highly recommend you don’t get one that doesn’t offer these, as you’ll be able to reap the benefits right away.
Many credit cards also offer things that you will find useful while you are traveling, such as car insurance and health insurance. American Express for example offers insurance on car rentals so that you don’t need to pay for it separately to the car rental business as well as travel insurance that covers you if you lose anything or are injured while traveling. That is a huge bonus I think.
Some of the More Popular Credit Cards
Let’s take a closer look at some of the more popular credit cards and their fees.
The Hong Kong and Shanghai Banking Corporation based in Britain has a number of credit and debit card deals for personal customers. HSBC charges an overseas conversion fee of one per cent on all transactions, whether you are buying goods and services with your card or using it to get cash. If you use your card to take out cash from an ATM overseas, it will also levy an additional $1.50 ATM transaction fee on each withdrawal. So if you’re in Europe and you want to withdraw four hundred Euros, it would cost you $5.50 (one per cent conversion fee of $4 plus $1.50 ATM transaction fee). Having said that, this is still at the lower end of what some banks and credit card providers will charge you on overseas transactions.
Bank of America
Bank of America’s charges for overseas transactions are some of the lowest available to personal customers. It also charges a one per cent conversion fee on all overseas transactions as well as a $5 fee for withdrawing cash from an ATM while you are traveling. However, these fees can be avoided if the bank you use overseas is part of the Global ATM Alliance. As well as Bank of America, this includes Barclays (United Kingdom), BNP Paribas (France), Deutsche Bank (Germany), Scotiabank (Canada), Westpac (Australia) and ABSA (South Africa).
CitiGroup in the United States has a number of Citi Cards which you can use when traveling abroad. It too charges a one per cent conversion fee on all transactions and an additional fee of $1.50 on ATM withdrawals, but like Bank of America it will waive these if you use your credit or debit card at one of its affiliated banks overseas.
This is a bit overwhelming, can’t you just tell me which one I should get?
Before I get your hopes high, I’m sorry to say that the answer is no. Depending on where you are, where you’re going, and what you’re going to do one credit card will be better than another, and only you can determine which one suits you best. You may want to check this article that covers benefits and highlights of most travel credit cards , or this one with a ranking of the best airline credit cards are in 2018, but, this said, I recommend you get two: one that will give you one of those huge bonuses when signing up, and another that will waive you the fees when withdrawing money overseas. Should you loose one for any reason you will still have a replacement, and if you don’t mind carrying a third one I would recommend you get one too that includes some sort of insurance.
What credit cards do you use when traveling? Do you pay attention to the fees that are charged? Which is kind of travel credit card would you be most interested in getting? Share your thoughts with us in the comments section below, and this post too if you liked it!
[Photo credit @ Flickr: 401k]