The Thrifty Traveler’s Guide to Credit Card Spending While Abroad

Cash or credit card? If this is on your mind while traveling abroad, the latter is, of course, the better option. With a credit card, you can enjoy benefits like automatic currency conversion, cashback and reward points, and flexibility of transactions.

However, exceeding the budget is one of the biggest disadvantages of credit card spending abroad. I still end up spending more than my budget while using a credit card during travel, and the bills next month give me nightmares!

Nevertheless, of late, I have started following some practical tips and strategies for credit card spending abroad, and they seem to work for me.

And as always, I had to share the tips with my Dream and Travel fam. Let’s check it out!

Credit Card Spending Abroad | Adhering To Your Budget

Credit card spending abroad simplifies cross-border transactions, and Visa, one of the leading names in digital payments, acknowledged this fact in its Global Travel Intentions Study 2023.

Moreover, many companies and banks today offer green or eco-friendly credit cards. Using a green credit card for your foreign travel is a sustainable practice you must follow.

So, for improved ease, benefits, and sustainability, credit card spending abroad is becoming more popular among international travelers.

However, to substitute the cumbersome process of carrying cash and making cash payments with credit cards, you need to consider the following tips. These tips will also help you keep expenses within your budget.

1. Choose The Right Card For Optimized Travel Benefits

Whether you’re after rewards points, savings on fees, or straightforward cashback perks, a cashback credit card is an excellent tool to reduce your travel expenses.

With cashback cards, in particular, you earn a percentage back on every purchase. Over time, rewards for dining out or taking a tour add up, putting extra money back in your pocket.

However, not all credit cards are created equal—especially for international travel. To maximize your savings and benefits abroad, look for cards with low or no foreign transaction fees.

You may also want to opt for cards with travel-specific rewards or partnerships with travel-related companies and brands so you can earn more rewards points.

Moreover, it’s a good idea to carry a backup card from a different network (e.g., if your main credit card is Visa, then you should have a backup credit card from Mastercard).

2. Understand Currency Conversion | A Game Of Fluctuating Numbers

Your credit card issuer handles currency conversion behind the scenes, but you should still know how it works so you can better understand your finances.

First, credit card networks use the current daily exchange rate for transactions. While it’s usually favorable, the rates always fluctuate.

Use online tools or check your card issuer’s site for real-time rates before you use your card. This helps prevent bill shock when you get home.

Additionally, some merchants may ask whether you want to pay in your home currency or the local one. This is sometimes called dynamic currency conversion (DCC).

Even if you don’t get asked, tell the cashier politely that you want to use the local currency. Doing this helps you avoid inflated exchange rates and extra conversion fees.

3. Use ATMs Strategically | The Act Of Balancing It Out

Credit card spending abroad may not work when you are purchasing essentials from small vendors. Further, sometimes you will need cash to pay taxi fares or tips at restaurants and hotels. Everyone does not have a cash terminal.

So, ATMs are often the most efficient way to get local currency but watch out for hidden costs. For example, your bank might charge you for using foreign ATMs. Local operators might also tack on their fees per withdrawal.

To minimize costs, it’s best to use ATMs connected to major international banks like HSBC or Citibank for better exchange rates and fewer fees.

Also, make larger, less frequent withdrawals to avoid multiple fees. Finally, look for cards or banks that reimburse ATM fees as a perk.

While rare, certain cards may offer cashback rewards for ATM withdrawals. If your cashback credit card includes this feature, it can help offset fees.

4. Inform Your Bank Before You Travel To Avoid Fraudulence And Disputes

Informing your bank before the travel can prevent your card from being flagged or blocked due to “suspicious” overseas activity.

Most banks allow you to set travel notifications easily through your bank’s mobile app, online banking portals, or a quick call to customer service.

5. Work On Your Budget | Make The Most Of The Local Deals

Smart spending isn’t just about avoiding fees. It’s also about making the most of your travel budget. Here are some tips:

Take advantage of local deals for tourists, such as city passes, museum tickets, or dining deals.
Minimize or avoid shopping at so-called “tourist traps” and instead shop where locals go to get the best prices and make safe transactions.
Use your cashback credit card for everyday expenses like meals, transportation, groceries, and other spending categories eligible for a cashback.
Some merchants offer discounts when you spend a certain amount. If you’re shopping for souvenirs or buying groceries, bundle your purchases to hit the threshold for a discount.
Some credit cards include access to exclusive events, complimentary concierge services, or free travel guides. Check your card’s benefits before you travel to make the most of these perks.

6. Keep Records And Monitor Transactions | The Best Way To Avoid Unauthorized Charges

Monitoring your spending abroad helps you stick to your budget and quickly catch unauthorized charges. You can use your bank’s app to get real-time notifications for every purchase.

Then, for easy cross-checking with your statement, keep your receipts or take quick photos of them. Most credit card or bank apps have real-time transaction histories, but it’s still best to have documents you can use as a reference.

Moreover, when you find any unfamiliar charges deducted, you can contact your credit card provider immediately.

Credit Card Spending Abroad | Know The Pros ✅ And Cons ❌

Credit card spending abroad is beneficial for first-time foreign travelers and travelers who go on multiple foreign trips a year. However, on the flip side, you may have to pay foreign transaction fees if you have not chosen the right credit card.

So, why choose credit card spending abroad? Let’s weigh the pros and cons.

Pros of Credit Card Spending Abroad ✅

Cons of Credit Card Spending Abroad ❌

‣ You can get comprehensive travel insurance with credit card spending abroad.
It will cover compensation for medical issues, flight delays and cancellations, and lost luggage.
‣ With a reputed travel credit card, you will get the best deals, discounts, and cashback for every Peso spent.
‣ Further, you can get exclusive travel benefits with a travel credit card. Many companies have tie-ups with the best airlines and hotel chains.
‣ By keeping your bank informed beforehand and with prior correspondence, you can increase your credit card limit to be more flexible in your transactions.
‣ Moreover, the best credit card companies ensure automatic currency conversions without additional fees.

‣ If you have not chosen the right credit card, you may have to pay up to 3% transaction fees for each purchase made.
‣ Further, small vendors and establishments without a card terminal will not accept credit cards.
‣ Moreover, many credit cards need ID verifications, and carrying your passport all the time is not a smart option.

A well-chosen credit card is a travel companion that saves you money, offers peace of mind, and even adds a little luxury to your trip without exceeding the budget.

Credit Card Spending Abroad | A Smart Way To Stay Safe During Travels

Choosing the right card, staying informed about fees, and using smart strategies are smart ways to make every Peso (and every cashback reward) stretch further.

So, whether you’re sipping coffee in Paris, haggling at a market in Marrakech, or snapping selfies in Seoul, your credit card can help you spend wisely and travel stress-free. Happy travels!