Credit cards and ATMs may have eased the challenge of spending and exchanging money on a trip abroad, but that doesn't mean we don't occasionally find ourselves in a foreign country, fuming in front of machines that have rejected our plastic cards. Fortunately, U.S. banks have recently begun issuing credit cards that are more widely accepted worldwide. Here are some tips on managing your cards and cash based on my recent trip to Japan and Hong Kong.
GET A CREDIT CARD WITH A CHIP
Many globe-trotting travelers have discovered that American credit cards, with their outdated magnetic stripes, are not always accepted now that most of the world has shifted to cards that use a smart chip. While merchants in Asia, Europe and elsewhere are supposed to be able to swipe our vintage plastic, many automated kiosks can't do that, which can be a problem at train stations and subways.
The future has finally arrived -- or at least the first wave of progress. Just before I left on my Asia trip, I got a FlexPerks Visa card from U.S. Bank that has a chip and a magnetic stripe, one of a growing number of American credit cards that now offer a "chip and signature" option. This isn't entirely a solution because the global standard is "chip and PIN" technology, meaning you enter a PIN, or security code, after a payment terminal reads the card's chip.
When I called U.S. Bank before my trip, I was told that I could get a PIN, but that any purchase using this code would be treated like a cash advance with 21 percent interest -- obviously, not an option! Fortunately, the card worked fine when I used it without a PIN to buy a train ticket from an automated kiosk in Hong Kong.
As I later learned, even without a PIN, a chip-and-signature card will work at most automated kiosks around the world because a signature is not required for purchases under $50. And at payment terminals used by stores and restaurants, the chip essentially tells the machine, "This card doesn't have a PIN, so spit out a receipt for the customer to sign."
The annual fee on my card is $49. Other chip-and-signature cards with annual fees under $100 include three options from Chase -- the J.P. Morgan Select Visa, the British Airways Visa and the Hyatt Visa -- and Citi ThankYou or Executive/AAdvantage MasterCards. For a more complete list, visit FlyerTalk.com and search for "chip and signature" cards; the frequent fliers who trade tips there keep a running list of these cards and their annual fees.
CHECK YOUR CARD'S FOREIGN TRANSACTION FEE
Another consideration is whether your credit card issuer charges a foreign transaction fee -- usually 1 to 3 percent of every purchase, including the 1 percent Visa or MasterCard fee that banks pass along to their customers. But now that the government requires card issuers to disclose these fees clearly, some companies have gotten rid of them.
The personal finance site NerdWallet.com lists dozens of cards that do not charge a foreign transaction fee, including all of the credit cards issued by Capital One, which bucked the trend long before other banks. Alas, many of the credit cards that travelers use because they earn frequent-flier miles still impose this charge, such as the American Express Delta SkyMiles card, and the ones that don't often have high annual fees, such as the Chase British Airways Visa ($95 per year). But unless you travel abroad frequently or spend a lot on your credit card, it's probably not worth paying a high annual fee to avoid this charge.
TELL YOUR BANK WHERE YOU'RE TRAVELING
Before I left for Asia, I made four phone calls to let my bank and credit card companies know that I would be traveling abroad -- a step that banks advise so an unusual spending pattern doesn't trigger a fraud alert. As I waited on hold, I wondered why banks don't make this chore easier and offer a travel notification tool online.
It turns out, some do. Jim Bruene, who blogs at NetBanker.com, posted the results of an informal test he conducted, finding it took him about a minute each to register travel notifications online with Capital One and Chase, and seven to 10 minutes to do it by phone with Wells Fargo and U.S. Bank (which don't offer online options). Citi is another bank that does.
Someday, Bruene predicts, banking apps will provide a better solution to this problem.
"Your mobile banking app will sense where you are and your card will be able to work there," he said. In the meantime, look for a "travel notification" tool in the customer service area of your bank's website before you pick up the phone.
LEARN THE EXCHANGE RATE BEFORE YOU LAND
Every time I travel abroad, I stumble off the aircraft, find an ATM in the airport, press the button for English and get stumped when I'm asked, "How many yen (or pesos, or Brazilian real) do you want?" You can't tell the machine, "Give me the equivalent of $200." After landing in Tokyo, I had to cancel the transaction and find a billboard down the hall with the current exchange rate; since $250 is about 20,000 yen, I had panicked about entering such a high number in a fog of jet lag at the ATM.
Save yourself that anxiety by visiting a currency conversion site such as www.xe.com before your trip and writing down how much you want to withdraw once you land. I'd also recommend reading the "money" section of a guidebook to see if the country you're visiting has any financial quirks. For instance, in Japan, many ATMs don't accept foreign bank cards, and the ones that do are scarce. At the main train station in Tokyo, an information booth attendant gave us a map and highlighted the route we'd have to follow (down the escalator, left at the second corridor, up the stairs, etc.) to find an "international ATM."
We had 10 minutes before our train left for Kyoto, and after that sprint I learned to keep an eye out for a Citibank or the local version of 7-Eleven, the two main operators of international ATMs. Later I noticed that information was mentioned in my guidebook. But it's good advice anytime you're in a foreign country, especially if you're heading off the beaten path: Don't wait until you're almost out of cash to look for an ATM.
