Earning rewards on foreign purchases

Cashing In columnist Tony Mecia
Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. He writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com

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Question Dear Cashing In,
I'm researching to apply for my first "mileage" card for traveling and looking into cards that have no foreign transaction fees and a decent sign-up bonus. My question is: Are foreign transactions treated equally when obtaining points through purchases? For instance, if I make a purchase overseas in euros, will that purchase apply toward the rewards program? Or does the purchase need to be made in U.S. dollars? Thank you for your time and help! -- Elizabeth

Answer Dear Elizabeth,
Thank you for the question. It sounds as if you'll be doing a fair bit of international travel, so you're right to look for a card that has no foreign transaction fees. Fortunately, cards with no foreign transaction fees are more common these days, so you should have no trouble finding one that meets your needs.

I would also add that if you're going to travel abroad, make sure that the card you choose has an EMV chip. Most other countries use EMV cards -- which are more secure than magnetic stripe cards -- and some foreign card readers have trouble accepting cards with no EMV chip. Having one won't guarantee that your card will work, but it can improve the odds.

On this topic, too, the trend is breaking in your favor: Most U.S. card issuers have begun offering cards with chips, especially those aimed at travelers. Just make sure you include that in your research.

Now, when it comes to frequent flier miles or reward points on purchases in foreign currencies, those are treated the same as purchases in U.S. dollars. When you make a purchase abroad, the credit card company converts the purchase to dollars -- typically at a favorable exchange rate, by the way -- then that purchase appears in dollars on your credit card statement. Any reward points you receive will be based on that dollar figure.

For instance, I went to London a couple years ago. Looking back on my credit card statement from the time, I recall that I had a couple beers at a pub called The Coal Hole, at a cost of 10 British pounds. My statement shows that I charged £10. It then multiplied that figure by that day's exchange rate, $1.562 per £1, and shows my cost as $15.62. My reward points were based on that $15.62. I used a card that gives double points at restaurants, and those extra points came through on the credit card statement.

With the help of technology, the card companies have made sure that the reward structures they have established work even when you are traveling internationally. You can use your card just as you would in the United States and reap the same rewards.

One more note -- whatever card you choose, be sure to let the issuer know about your travel plans before you go so the foreign transaction doesn't trigger a security alert that could shut down your charging privileges.

Good luck to you as you begin your journey toward finding a card that meets your needs. 

See related: 5 credit card questions to ask before traveling overseas, Preparing your cards for overseas travel

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Updated: 06-18-2018