Disclaimer: We are not qualified legal or tax professionals and are not giving advice. Always speak with a qualified professional before making any legal or financial decisions.
Credit cards are a great way to travel because they offer a lot of conveniences. Many credit card companies will provide travel insurance, which is great for those who don't have an emergency fund set up.
The convenience of being able to use your own money without having to exchange it into the local currency before you leave is also very nice.
Whether it's for security, convenience or just out of habit, a credit card is a traveler's best friend. On top of making it easier to make purchases abroad and helping you get ready for your trip, most credit cards offer several advantages that make them a preferred way to pay. In this blog post, we talk about 8 reasons why people love traveling with their credit cards!
1. Traveling with a credit card is safer than carrying cash
Credit cards are much safer than carrying cash because the bank will cover stolen payment information, while cash cannot be reimbursed in any way.
Since credit card companies use the same security measures for contactless payments as chip-and-PIN cards do, there is no need to worry about skimmers when using them with your phone.
However, if you're still paranoid about safety, CIBC advises that you delete your data by removing your card's saved credentials from online shopping accounts and ordering a new prepaid card number from your issuer.
On top of all this security advice, make sure to monitor each purchase closely on both, paper, and on the internet.
2. You can earn points and rewards for every purchase you make
It depends on the store, but you can earn points and rewards on purchases you make on your credit cards. For example, Best Buy has a points system called My Best Buy that's pretty straightforward. You earn points for every dollar you spent by redeeming reward certificates from the Catalog.
In some stores, it might be as simple as entering your name as a customer and enjoying some daily deals or more targeted offers in exchange for providing personal information to the retailer.
If this is something you're interested in, make sure to read privacy policies first! It may not seem like a problem right now if you don't mind sharing your favorite shoe size anonymously, but think about what would happen if one day all your purchases were public information?
Take Advantage of Rewards Programs
Many travel credit cards come with lucrative rewards programs that allow you to earn points, miles, or cashback on your purchases. For frequent travelers, these programs can lead to huge savings on flights, hotels, rental cars, and more.
Be sure to research different credit card rewards programs and pick one that aligns with your spending habits and travel goals. You'll want to focus on cards that offer extra rewards on travel purchases. Also, look for signup bonuses that give you a large lump sum of points after meeting a minimum spending requirement.
3. It's easier to track your spending abroad.
It's actually much easier to track your spending abroad when using a credit card instead of cash or checks. You'll be able to see all your activity just by using the credit card's website or mobile app.
Also, your credit card receipts are in one currency. Also, you can easily use the foreign currency conversion calculator provided by Visa to determine how much money you spend in euros, or how much something costs.
You need not know exact yen conversion rates between yen and US dollars to track what you bought with one type of currency vs another if they are calculated out for you on your receipt.
The only caveat is that some cards have international transaction fees which are usually waived the first year but then accumulate after that for each dollar spent abroad.
4. You don't have to worry about the value of foreign currency if you're traveling abroad as long as you use your credit card.
When you purchase something in a foreign currency, your credit card will use its own exchange rate to price the good or service.
The true cost-the actual amount in US dollars -will depend on whether your credit card charges an "onboarding" fee and/or an "interchange" fee when converting dollars to euros, pounds sterling, etc.
On average, interchange fees and onboarding fees add around 4% and 2%, respectively. If you charge $100 for a product that then costs €105 euro in another country where your credit card has a 4% onboarding fee + 2% interchange fee = $106.
5. Credit Cards offer protection against fraudulent charges
Credit cards offer protection against fraudulent charges by the card issuer. For example, if you purchase something with your debit card and it turns out to be stolen, then the bank will reimburse you for that money.
They do not protect against unauthorized usage of your account or identity theft which are crimes committed by someone who knows or learns of your account information.
Credit cards use a 3-digit code on the front of the card so even if someone gets access to it they would not know what number to enter unless they had seen where it was entered before, this is supposed to give you more protection than using cash or checks.
6. If there are any issues with your trip, such as lost luggage, it's easy to dispute
Thanks to protections offered by most banks and financial institutions, it's easy to dispute lost luggage and get reimbursed. If you were not at fault for losing your luggage, your credit card company may cover the cost of the lost property.
The first thing to try is contacting your credit card company (via phone or email). If you don't get a satisfactory response, register your complaint with the airline's customer service department directly.
Most airlines offer passengers the opportunity to purchase travel insurance before they leave on their trip that might cover their expenses in the event that their luggage goes missing.
Sometimes it can be worth purchasing this for additional protection during your next flight; particularly if you'll be traveling overseas where insurance coverage may not be as commonly available as it may be domestically.
Look into Travel Insurance Benefits
In addition to the standard purchase protections, many credit cards provide complimentary travel insurance when you book travel using the card. This is an excellent benefit as travel insurance can be costly to purchase separately.
Key coverages to look for include trip cancellation/interruption, delayed baggage, emergency medical/dental, and rental car damage. Read the fine print to understand the details of what's covered. While credit card travel insurance isn't as comprehensive as a dedicated policy, it's sufficient coverage for many travelers.
7. Most major cards offer travel insurance
Luckily, these days most major credit cards offer some form of travel insurance coverage where they'll reimburse customers for expenses incurred due to accidents or other events while traveling.
After all, the best way to get paid back for a trip-ruining injury or flight cancellation is so it doesn't happen in the first place!
For United States-based cards, the most common options are also available with different levels of coverage through
American Express Travel Services at no additional cost when you charge your costs to an eligible card (and enroll for this service).
Those include travel accident insurance (up to $250,000), baggage protection (up to $1,250 per item) and lost luggage reimbursement ($3 per day up to $150).
Coverage varies by the card issuer; check your credit card's terms and condition guide for individualized information on the back for more details.
Notify Your Bank Before Traveling Abroad
Before any international trip, it's wise to call your credit card company to notify them. Otherwise, they may suspect fraudulent activity when the card is used abroad and freeze your account.
Let them know your travel dates and destinations. You can also ask them about any foreign transaction fees, so there are no surprises on your statement.
8. It's a great way to build your credit score
If you have a credit card that doesn't charge foreign transaction fees, it can be a great way to build up your credit score.
Here's how to build your credit score for free while traveling abroad with your credit cards:
1) Pick a credit card with no foreign transaction fee
2) Travel overseas and charge something on that credit card every day or two
3) Pay it off when you get home before the end of the month. That way your bills are less likely to go into collections when they're in another country.
For more information on credit score tracking, read
The 8 Best Apps For Monitoring Your Credit Score
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