Tuesday, 9 February 2016

Want to use Credit Card on your trip abroad?

Any kind of plastic money does offer great convenience; while debit cards allow you to have access to the funds you have, credit cards allow you short term borrowing.  Despite the obvious advantages of using a credit card using it prudently especially when travelling abroad is advisable. Being sure when and how to use a credit card on your trip abroad and exercising a few basic precautions can help you stay safe and also make the best possible use of the card.

Check About the Acceptance Overseas:
Before travelling especially if you are going to country that you have not visited before check about the acceptance of your card there.  While some cards may not be accepted in some countries due to difference in the type of technology used, it might be possible that the country that you are visiting might not be the most favorable to use a credit card altogether. This could be due to reasons like preference for cash by the local population, presence of few merchant establishment or distrust for credit cards. This could also be due to a high incidence of charges. Card acceptance can be found out by getting in touch with the card issuer before leaving for abroad.

Be Sure About the Charges:
The convenience of credit cards can easily be overshadowed by the applicable charges. There are different types of charges and these may vary from company to company. They may be mentioned in the form when you apply for credit card but more often than not one tends to forget about them. There can be broadly three type of charges that credit issuers charge; these are:

  • Foreign Transaction Charge: Most credit card companies charge a foreign transaction charge ranging from 2.5% to 3.5% of the transaction amount.

  • Foreign Currency Conversion Charge: When you use credit cards abroad you will be bydefault be billed in the local currency while your balances are in the Indian Rupee. Thus this conversion from INR to the foreign currency attracts a conversion charge which may range from 1% to 2%.

  • Cash Advance Fee: Even if one uses the credit card within the country for cash withdrawal a fee is charged which is usually exorbitant. When this cash is withdrawn overseas 1% to 4% is added to the already exorbitant fee making it super expensive.

When travelling abroad, you would carry the card with an intention of using it, so it does not make sense to not use it altogether because of the charges involved. Sometimes despite the charges the using the credit card may be the most prudent choice but it is important that you check with card issuer about the charges and have clarity on them.

Understand the Basics of Safe Usage:
Almost all credit card companies have put in place elaborate security systems to make card usage safe. PIN numbers, signature on the reverse, photograph on the card are just a few of them. However the cards are still susceptible to misuse especially when travelling abroad. Before making the trip inform the company about your travel plans so that the card is not blocked due to suspicious activity.

Exercise basic precautions like not handing over the card for swiping; always get it swiped in front of you. Some places you may be required to produce an identity proof in order to use your card so keep that handy with you. Know how to get in touch with the card issuer in case the card is lost and you need to block it. Always sign the card on the reverse in possible opt for a card that carries your photo. Do apply for alerts (mobile and email) so that you are aware of the transactions, this will help you in curbing any fraudulent transactions or wrong swiping of card.

Some card issuers may provide some kind of insurance cover for the card users, check about it before taking the trip. This could come in handy if one is travelling abroad and is caught in a tricky situation. When transactions are made in a different currency it might get difficult to keep a track of how much you have actually spent so do take care that you do not end up spending more than you intended to. Never rely only on the credit card, do have some alternative arrangement of funds too.

By Team Credit Sudhaar

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