BACK

Cashing In Q&A columns

Are chip cards necessary for charging overseas?

Magnetic-stripe cards becoming less functional abroad

Summary

With magnetic-stripe credit cards being phased out in Europe, how necessary is it for Americans to get the new chip-and-PIN variety while traveling?

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Question for the CreditCards.com expertDear Cashing In,
It looks like I’m going to be traveling overseas more often, particularly to Europe, and I’d like a rewards card that will take advantage of this. I’m currently using Chase Freedom. What would you suggest? Do I need to get a chip-and-PIN card like they use in Europe? — Ilana

Answer for the CreditCards.com expertDear Ilana,
First, I’d look for a card with no foreign transaction fees. Your current card, Chase Freedom, charges 2.7 percent for every charge you make overseas — that means you would pay an extra $82.50 every time you charge $3,000.

At that rate, it might make more sense to upgrade to Chase Sapphire Preferred. Unlike Freedom, which is fee-free, Sapphire Preferred comes with a $95 annual fee (waived the first year), but you can probably earn that back in saved foreign transaction fees — not to mention richer rewards for your travel expenses. Among other goodies, you get double points on travel bookings made via Chase Ultimate Rewards and a 40,000-point sign-up bonus worth about $500 in travel.

Other reward cards (with modest or no annual fees) that don’t charge foreign transaction fees include Capital One Venture, Citi Thank You Premier, Chase Priority Club or Marriott Premier Visas, and Bank of America Travel or Privilege.

None is chip-and-PIN, however. Like most of the credit cards made in the U.S., they sport that familiar magnetic stripe, and use a technology that is being phased out in many parts of the world, particularly Europe, where chip-and-PIN cards are considered a safeguard against identity theft.

Chip-and-PIN cards are meant to work with a PIN number. These cards are harder to duplicate and pull information from. As someone who has had a credit card duplicated and used while traveling overseas (without having ever misplaced it), I can vouch for the fact that this does happen, pretty frequently. (I should add I’ve never been held liable for those fraudulent charges.)

It’s hard to find an American-made chip-and-PIN card, however, and so far impossible to find a good travel rewards chip-and-PIN. A few credit unions issue basic chip-and-PIN cards, but since you want to maximize rewards with your purchases, your best bet may be to make do for now with magnetic stripe cards — which still get you pretty far, rumors not withstanding — and avoid kiosks that insist on chip-and-PIN. During this transition period, it’s rarely an either-or proposition — up to now, American cards that have chip also have a stripe, as do most European cards.

Your other option is to apply for one of the chip-and-signature cards that have begun to appear stateside. These have chip technology (in addition to a magnetic stripe), but unlike European versions they require a signature rather than a PIN. While they won’t be accepted at every kiosk overseas, you’ll probably find them easier to use than cards with magnetic stripes. It looks like U.S. card issuers are settling on that compromise for travel rewards cards, judging from what we’re starting to see on the market.

Chase has a few travel rewards cards of the chip-and-signature variety, including the Hyatt Visa and British Airways Visa. Citibank seems to be moving in this direction as well. When Citi introduced the premier version of its Hilton rewards card in July, the HHonors Reserve Visa, it was in the form of a chip-and-signature card.

Choose a card that rewards your travel behavior, including airlines and hotels you favor, but make sure it’s one that will be widely accepted and doesn’t gouge you with unnecessary fees.

See related:American travelers’ 2012 guide to chip-and-PIN cards, 8 ways to keep your cards safe during vacation travels

What’s up next?

In Cashing In Q&A columns

Spend now, save later: The financial mind of the modern single

Singles have a buy-now-save-later attitude when it comes to spending, and although attitudes are tough to change, changes in how they go about spending could bring them financial stability

Published: August 30, 2012

See more stories
Credit Card Rate Report Updated: April 20th, 2019
Business
15.32%
Airline
17.50%
Reward
17.56%
Cash Back
17.60%
Student
17.79%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.