The Traveler’s Guide To Credit Cards

credit cardsWhen planning a trip, the most confusing aspect is often trying to figure out what type of currency to bring along and how to navigate your credit cards. With help from Anisha Sekar, VP of Credit and Debit Products at NerdWallet, as well as my own travel experience, I’ve put together this guide to help you travel more efficiently with credit cards.

Know Before You Go

There are a few things you should take care of before heading off on your trip. First and foremost, no matter what credit or debit card you bring along, you must call the card company to let them know you will be traveling. If you don’t, the card will most likely become locked and you will have to call to have it reactivated, a process that can be a hassle when using international phone lines. It’s also good to call to see what spending and withdrawal restrictions are on the card, as well as if there are any incentives like travel insurance, no transaction fees or coverage on rental cars. For example, with Visa, travelers can save money on basics like rental cars, as well as receive perks from the Visa Signature offerings, including the Luxury Hotel Collection and the Visa Signature Global Concierge.

Moreover, making photocopies of all your important documents, including your credit cards, is important. When I travel, I always bring a copy hidden somewhere in my luggage, away from my valuables, as well as leave a copy at home with my family just in case.Questions To Ask Yourself Before Choosing A Credit Card

Everyone has their own unique travel style, meaning while one card may be right for one person, it may not be as practical for someone else. Before deciding on a card, ask yourself:

  • Where am I traveling to? For example, if you often travel abroad, a card without foreign transaction fees is a must. However, if you’re more likely to do a domestic road trip, you’ll probably be more concerned with what types of car rental insurance a card offers.
  • What brands am I loyal to when I travel? If you tend to stay in hostels and use different airlines every time you travel, a branded card probably isn’t a wise choice. However, if you’re a loyal Starwood or Delta customer, signing up for one of their company cards can have a lot of benefits.
  • Can I travel hack? If you don’t mind putting in the time to do research, cards that pay out in airline miles or rewards points can offer serious benefits.
  • Is the annual fee worth it? While many people automatically reject all credit cards charging annual fees, it’s a better idea to do a bit of research and math before making the final decision. Advises Sekar, “Do a quick back-of-the-napkin calculation weighing a higher rewards rate and benefits against an annual fee, and let the numbers speak for themselves.”

Foreign Transaction Fees

When trying to choose a travel credit card, this is probably the most important factor to look into. Many cards will charge you 1% to 3% every time you use the card. While this may not sound like a lot, it adds up very quickly, many times ending up to be more than the card’s annual fee. In my opinion, if you travel abroad regularly, it’s a good idea to find a card that doesn’t impose a transaction fee, like Capital One and Discover. Some good ones to look into include:

  • Capital One Venture Rewards Card– This is the credit card I use for travel and highly recommend. Along with being able to use it abroad incessantly without ever being charged a fee, some of the perks include two miles for every $1 spent, 2% back on all purchases, 10,000 bonus miles when spending $1,000 in the first three months of signup and no annual fee on your first year. Moreover, every single time I have called them, I have received exceptional customer service. They overnighted me a new card when mine was stolen, taken off charges for returns that never went through and have always been extremely helpful.
  • Chase Sapphire Preferred Card– While I’ve never used this card myself, I’ve heard excellent things about it from those who have. Some perks include a $500 signup bonus, 40,000 Ultimate Rewards Points if you spend $3,000 in first three months of signup, no annual fee the first year and two points per $1 spent on most travel-related expenses. You’ll also receive one additional point per $1 spent and 20% off when you book travel through Ultimate Rewards.
  • BankAmericard Privileges with Travel Rewards– This travel card comes with many perks, and no foreign transaction fee. You’ll earn double points on each purchase, there’s no annual fee for the first year, and if you qualify you may have the fee waived in subsequent years. Additionally, points never expire and you’ll have access to 24-hour travel and emergency assistance as well as a concierge service.

EMV Compatibility

For those using a magnetic stripe card for travel, be aware that some places may not accept them.

“Around the world, credit cards are using embedded smartchips, called EMV chips, for verification rather than the traditional magnetic strips,” explains Sekar. “Though standard in other countries, EMV technology has yet to be adopted domestically.”

There are many cards that use the EMV technology, such as the BankAmericard Privileges with Travel Rewards card mentioned above, Chase Hyatt Visa Signature and all Citi MasterCards by request.

It is worth to note that even when cashiers say they cannot accept your magnetic stripe card, they probably can.

“Your magnetic-stripe card does work,” assures Ava Kelly, Head of Global Affluent and Cross Border Initiatives at Visa Inc. “When traveling internationally, if you encounter a business that says it cannot accept your card, just ask them to try again. Tell them to look for the slot for swiping a card, and follow the prompts on their payment terminal.”

Personally, I think this is worth taking into consideration. However, I think it’s more important to make sure you use Visa when traveling abroad. When other travelers have their credit cards declined, it is usually because they are carrying an American Express or Discover Card – unless they’re in China, that is, where Discover is the preferred method of payment.

Auto Rental Coverage

For travelers looking to rent a car, you should look to your credit card to help you with insurance. Often times, the policies offered to you by car rental agencies are already included in your credit card.

“All credit card networks provide some form of rental car insurance, though not all specific cards offer the benefit,” explains Sekar.

The questions you should look into include:

  • What is covered? For example, while Discover’s policy is limited to collisions and upsets, American Express Platinum covers theft, collision and other events.
  • How long do you have to make a claim? For instance, MasterCard holders get 60 days. On the other hand, American Express gives their clients 48 hours.
  • What will the company pay for? If you look into Visa, you’ll see they cover administrative and towing costs. However, Discover will not pay for “loss of use.”

Overall, Visa offers the best car rental insurance benefits of the four major networks. First of all, each of their cards includes rental car insurance for physical damage, theft, loss of use, towing and administrative costs. MasterCard is also pretty good, although its not offered on all cards. Remember, it doesn’t cover loss of use or theft of an unlocked vehicle like Visa does. American Express offers one perk that some may be interested in, the ability to add extra coverage for a small fee. Discover is hands down the worst card when it comes to auto rental coverage, and only a few of their cards even offer it.

Additionally, many prestigious cards also other types of travel coverage, such as lost baggage, travel delays, trip cancellation, accidental death and dismemberment, which is worth looking into.

Should You Consider A Branded Airline Or Hotel Card?

This will depend on how you travel. For example, if you regularly check bags, you may want to find an airline card that waives baggage fees. Just make sure to look at what the annual fee is, and calculate if you will end up spending more or less. If the annual fee is $50 and you usually spend $150 a year checking bags, it may be worth it to get the card. Moreover, hotel cards can often make your stay a lot nicer if you regularly book a particular hotel brand.

“Hotel credit cards can sometimes come with automatic elite status, which brings perks like late checkout, free newspapers, accelerated rewards earning and other goodies,” says Sekar. “Sometimes, these hotel cards will even have no annual fee, providing you with perks for free.”

Personally, I’m a fan of the American Express Starwood Preferred Guest Card. Although there is an annual fee, it is waived during your first year. Additionally, you’ll get 10,000 Starpoints after your first purchase, and 15,000 additional Starpoints when spending $5,000 in six months. Points can be redeemed for free stays in over 1,000 hotels in over 100 countries or free flights. And, they give you many chances to earn double points and sometimes even five points per dollar.

Do I Have To Pay An Annual Fee?

The truth is, even though many credit card companies charge an annual fee, you can often get out of paying it. Just simply pick up the phone and ask. It helps if you have a good relationship with the credit card company and are timely with paying the bills. Furthermore, because many companies are now relying heavily on social media, consider tweeting a polite comment about your displeasure with the annual fee, including the company in the tweet using the “@” symbol and the credit card company’s Twitter handle. Other fees you can try to get lowered or waived include the balance transfer fee, late fee, foreign transaction fee, interest rate and over the limit fee.

[Image via 401(K)2012]

Frequent flyer applies to 13 credit cards in one day to earn points

There’s a whole pseudo-science on the web regarding the art of earning miles and points by means of credit card applications. Many in the mileage running and hoarding business use credit cards heavily to earn special bonus or signup-miles by applying at certain times or hitting minimum spend limits. With a decent credit score it’s a fairly easy game to play, though I’ll be the first to admit that the full ramifications of cyclically applying-for and canceling credit cards are still unknown. Still, that doesn’t stop many from churning out the applications.

Recently I came across the most outrageous example of this sort of activity from a blogger named Ben from The Man From 1000 Places, who actually applied to thirteen credit cards in one day in order to reap a total of more than 500,000 miles and points. Ten of those applications have currently been approved while another three are still pending. With a score in the high 700’s before the application, Ben expects his credit rating to take a brief hit but return to his normally high rate after 6 months.

With the 500,000 points, a wide variety of travel rewards and upgrades are available to the savvy hoarder. Round trip, business class tickets between North America and Europe, for example, cost 100,000 miles on American Airlines, and though the blogger wont be receiving all of the miles in one specific account he’ll be able to combine several of them.

In order to keep those points, he’ll will need to pay $233 in annual fees and then cancel most of the cards to prevent more annual fees. The only other trackable cost is his credit score. Gary Leff, co-founder of frequent flyer community milepoint.com and author of the ViewFromTheWing blog suggests:

Applying for credit generates a consumer-initiated pull of your credit score, and every time you apply for credit it’s an indication you might NEED that credit, and may be a bigger risk.

In the long-run you might well improve your score by having more available credit that you aren’t utilizing, and over time as the accounts age by having more older accounts. But the short-run effect of several credit pulls and a younger average age of accounts will make a big dent in your score.

If you see your score drop below 750 you’ll begin receiving higher interests rates on major purchases like mortgages, and those costs will likely exceed any benefits you get from signups. So it’s important to stay away from plenty of new card signups leading up to a home purchase or refinance. Individuals with more borderline credit may experience problems with auto loans.

Taking the time to apply for and earn the cards thus might be a decent way to get some extra points, as long as the financial preparations are made and the credit cards are properly disposed of. Hopefully there’s no long term financial impact beyond the credit score.

[Flickr image via Andres Rueda]

Remembering Europe before the Euro

American travelers often complain about the current money situation in Europe. With the Dollar/Euro exchange rate sitting around $1.40/1, along with inconvenient credit card PIN requirements, making a purchase in many European countries is downright inconvenient. But there was a time it was far more complicated – namely any date before 2002, when Europe’s common currency, the Euro, was first introduced.

My first taste of European travel came in the waning years of Deutsche Marks, Guilders and Pesetas. Every time you moved to a new country, you had to exchange your money for a new currency. For a young backpacker like me experiencing several countries for the first time, it was a confusing and expensive proposition, particularly when you were in transit among several of them at once. Traveling from The Netherlands via Belgium to France? Best not try to buy something in Brussels: that would require you to exchange money. And forget about keeping the notes, coins and exchange rates straight – each brightly colored pink note and strangely bearded head of state was a new lesson in geography, history and politics and quickly calculated math.

Europe has grown up since then. Today, I can use the same money for a pizza in Rome as I do to buy a sweater in Dublin. But despite the simplicity of the Euro, I still find myself pining for those days before the single currency began its monetary dominance. Maybe it’s no more than the naivete of youth – a simpler time in my life when those first exotic breaths of foreign culture and the feel of strange currencies in my palm suggested all the possibilities of travel and adventure.

Is travel easier in Europe now? Yes, absolutely. But with that ease of use, a distinct piece of national identity also disappeared along with it. Our globalized world marches on.

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[Photo by Flickr user viZZZual.com]

Travel to Europe easier with chip enabled debit cards

sim pin chip credit cardThe days of traveler’s cheques are far far behind us, but that doesn’t mean that paying by credit cards oveseas is always easy. In particular, Europe and many other countires are prone to using chip and pin cards for accepting transactions rather than the magnetic striped plastic that most Americans use. While most outlets have a backup machine for “swiping” cards rather than plugging in the chip, a few key places require them; for example, the popular Velib bike sharing program in Paris only works with chip+pin and American Express cards.

This left most Americans without many solutions, since most US Banks wont issue chip and pin cards. Until now. Travelex, the worldwide bank and currency exchange company (you’ve probably seen their booths at the airport) just announced that they’ll be offering prepaid chipped debit cards for savvy travelers early next year.

The only problem? Travelex offers a pretty crummy exchange rate for average travelers. As Ed Perkins from SmarterTravel in this MSNBC article points out: “You’re paying a stiff price for the convenience” And hey, Travelex shafts on you cash exchanges at the airport, so why not with a prepaid debit card?

Needless to say, if you’re willing to take a beating on the exchange rate you can pick up your own card over at Travelex.com under Cash Passports.

[Thanks to Moody75 for the link]

flickr image via cmcphotography

Hyatt Hotels launches first branded credit card

Hyatt Hotel customers will soon have a new way to earn rewards. The hotel company and Chase Card Services announced the launch of Hyatt Visa credit card. Use the card once and Hyatt members will receive two nights at any Hyatt anywhere in the world, redeemable within one year.

According to the terms, the Hyatt Card will include zero foreign transaction fees, three Hyatt Gold Passport points for every US$1 spent at a Hyatt property, no blackout dates and 15% bonus points for Platinum members. The card carries an annual fee of US$75.

“To further Hyatt’s mission of providing authentic hospitality, we have made significant enhancements and adjustments to our Hyatt Gold Passport loyalty program over the past two years to make it best-in-class. The Hyatt Card is another logical step in deepening relationships with our guests and welcoming new travelers into the fold,” said John Wallis, global head of marketing and brand strategy for Hyatt, in a press release.