By Mitch Lipka
January 14 Americans run into big problems when
they travel outside the country because their credit cards are
not high-tech enough and because some issuers charge high fees
for foreign transactions.
In the wake of a large data breach at retailer Target Corp
, you're going to be hearing more and more about embedded
chip technology used overseas, along with personal
identification numbers for credit cards.
Pay attention: if you don't plan ahead, you're going to run
into extra charges while traveling that could add up to hundreds
of dollars. You may even get stuck without a payment method in
places that won't take your low-tech American card.
That's what happened to Lance Longwell, 37, of Ambler,
Pennsylvania, when he tried to pay for a meal in Ireland in
October. "We tried one card... and then another," says the
co-author of the Travel Addicts blog ().
"I had a Visa, an Amex and a MasterCard on
None worked. The waitress looked at one of the cards and
commented: "It's an antique.'"
Longwell paid in cash.
Longwell and other U.S. travelers to Great Britain, Denmark,
France, Italy, Brazil and other countries tell similar stories
of being unable to make purchases with their old-fashioned
credit cards, secured only with a magnetic strip and their
signature. Travelers say the problem is becoming more
The most persistent problems are reported by those who try
to make purchases at kiosks for such things as train tickets and
bicycle rentals. The good news is that a little pre-trip
planning can help avoid such snafus.
"There's really no excuse any more to travel abroad carrying
an ugly American credit card," says Daniel P. Ray,
editor-in-chief of CreditCards.com.
Foreign transaction fees are typically about 3 percent, says
Bill Hardekopf, chief executive officer of LowCards.com. A
traveler who charges $10,000 on a trip would be looking at about
$300 in fees.
As far as security technology goes, many credit card
processing machines are set up for cards that have a microchip
embedded in them - commonly known as EMV - and require a PIN
from the user. Chip cards, particularly those requiring a PIN,
are much safer from fraud, says Erik Larson, president of
NextAdvisor.com, which compares cards and services.
Larson adds that in some areas that cater to tourists,
you're more likely to find places that will still accept the
standard U.S. card, but there's simply no reason to limit
yourself like that.
If you end up in a store or restaurant that doesn't accept a
credit card with a magnetic strip, you could be washing dishes.
"It is your responsibility to ask if that merchant takes your
card before proceeding," Hardekopf says.
CARDS TO CONSIDER
While U.S.-issued cards with EMV technology and a PIN are
hard to come by, they do exist, and most major card issuers have
a card that has at least a chip, if not a PIN.
Before traveling, consumers should ask to replace an
existing card with one that has the chip technology, if
To find a new card, Ray, of Creditcards.com, says consumers
can visit credit card comparison web sites to find information.
Larson suggests looking for cards associated with a loyalty
program. Some examples of cards that offer chip-enabled versions
and also reward loyalty program members are Marriott Rewards
Premier and Citi's Hilton HHonors Reserve. Because
they're aimed at travelers, cards associated with hotels or
airlines are more likely to be available with chips.
Larson suggests getting two cards instead of just one. Carry
a back-up card in case you lose one or have a problem with the
main card you are using.
You might have the best luck with banks and credit unions
aimed at serving U.S. government workers and military, including
USAA, State Department Federal Credit Union and Pentagon Federal
Credit Union. These credit unions allow members of the public to
join by making a small donation to specific non-profits.
Other cards recommended by the experts include the Chase
Sapphire Preferred card. It has no foreign transaction
fees and is chip-enabled. It also comes with an introductory
offer of 40,000 bonus points after you've spent $3,000. That
works out to $500 in credit toward hotels and airfare booked
through Chase's rewards program.
Travel and dining also earn double points. The card does
have a $95 a year fee, but it is waived for the first year.
In addition, Bank of America has a Bank Americard
Travel Rewards card. That card has the chip technology, no
foreign transaction fees and no annual fee. If a user makes $500
in purchases in the first 90 days, they get 10,000 bonus points,
which would qualify for a $100 statement credit. Money charged
on the card during travel earns points at a rate of 1.5 for
every dollar spent.
No matter what card you pick, the experts recommend that you
notify your credit card company when you're going to leave the
country to avoid a fraud flag - potentially freezing your
account - because of charges that are out of keeping with your