Credit cards when going abroad

Credit cards are very useful for travellers who are about to go abroad, although it is a good idea to be aware of the charges that can be made.

Credit cards are very useful for a person who is going abroad, either for a holiday or on a business trip, as they can pay for goods in the local currency while they can charge the card holder in dollars.  The currency is changed using a daily exchange rate.  This exchange rate is usually a reasonably good exchange rate compared to the ones that can be had from retail bureau de change.  However it is often the case that a person can find that they spent more than they expected with a credit card as they are not in the habit of thinking in terms of the foreign currency.

Another advantage of using credit cards abroad is the security that these cards have.  If cash or travellers cheques are lost then the cash can be very hard to replace.  With a credit card then the card can be relatively easy to cancel and then replace quite quickly.

It can also mean that a person is covered through the zero liability guarantees that many credit cards operate.  This guarantee is that there will be no charge on an unauthorised transaction that is made with the card.  This means that if a credit card transaction is reported to a bank in a timely manner and the person has not materially helped in the transaction, for example by lending out the card, then the card transaction will not be charged to the account.

Many credit cards do have foreign currency charges for using the card.  This can be a fixed amount, but is usually a proportion of the transaction.  There can sometimes be a floor to the amount which means that it may build up if there are a number of small transactions on the card.

One of the reasons why payment cards grew was through helping travellers.  American Express, a pioneer in payment cards and credit cards, was actually a company that had been formed around the idea of helping travellers.  It had originally run a pony express in New England and had been the first company to offer traveller’s cheques to foreign travellers.  It was as an extension to these traveller’s cheques that the company had introduced the American Express charge card.