Earning travel rewards while living abroad: How 'travel' is coded
Card networks assign category codes for merchants accepting their credit cards
Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. Every week, he answers readers’ questions about credit card rewards programs in his “Cashing In” column.
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I'm moving abroad and worry that my travel credit card won't pick up the right category code for rewards. Is this a valid concern?
Figuring out what counts as "travel" on a credit-card foreign transaction is a valid concern, and it's sometimes confusing.
However, you shouldn't worry about whether merchants who accept credit cards abroad will have the technology to process those transactions. It is the card networks, such as Visa and Mastercard, that assign those category codes to merchants.
Dear Cashing In,
I am moving to Jordan, where restaurants and hotels will probably allow me to pay with a credit card, so I'm considering the Chase Sapphire Preferred and Reserve cards to maximize my rewards.
However, I read the fine print on these cards, and the way that Chase registers your purchases as “travel” is by using a category code that has to come from the merchant's side of the transaction.
I'm a little concerned that, since technology is generally dated in Jordan, perhaps they won't have that code thing set up.
Do you know if this is a standard for all credit card technology? Is this a valid concern for me to have? Thank you! – Jackie
Moving to Jordan sounds like an exciting adventure. It’s smart of you to plan ahead and start thinking about finances – including how to pay your bills, draw money from bank accounts, and, yes, receive credit card rewards.
Many people don’t appreciate that earning rewards on credit card purchases is mostly an American phenomenon.
In other parts of the world, banking regulations limit the fees that card companies and networks can charge merchants.
In the U.S., there are few such regulations on credit card transactions, so card companies can use the money they make from those fees and pump it back into marketing in the form of rewards.
That means that if you are living in Jordan or pretty much anywhere else overseas, you’re unlikely to see credit card reward opportunities in those countries as lucrative as those you can find in the U.S.
Credit card rewards while living abroad
If you’re thinking of moving abroad and considering a rewards credit card, you’ll want to ensure first of all that it charges no foreign transaction fees.
Second, you’ll want to make sure that the points the card gives align with your spending.
Travel is an obvious category to consider, but if you are living abroad, you’ll also have other daily expenses such as groceries, which are another popular rewards category.
Tip: What counts as travel varies by card issuer. If you're not sure about the travel categories included in your credit card, contact your card issuer or check your card's guide to benefits.
Rewards credit cards for moving abroad
The Chase Sapphire cards you’re considering are solid contenders. Let’s look for a moment at the features of each one:
- Annual fee: $95, waived the first year.
- Points earning: 2 points per dollar spent on travel and restaurants in form of Chase Ultimate Rewards points; 1 point per dollar spent on everything else.
- Other perks: 50,000-point sign-up bonus when spending $4,000 in first three months.
- Foreign transaction fee: None.
- Annual fee: $450.
- Points earning: 3 points per dollar spent on travel and restaurants in form of Chase Ultimate Rewards points; 1 point per dollar spent on everything else
- Other perks: $300 annual travel credit; airport lounge access; Global Entry/TSA Precheck credit; 50,000-point sign-up bonus when spending $4,000 in first three months.
- Foreign transaction fee: None.
Earning ‘travel’ rewards while overseas
Figuring out what counts as a “travel” expense is a valid concern, and it can sometimes be confusing.
- Generally, any charge with a hotel, airline, cruise, train, taxi and the like count as travel.
- Organized tours sometimes count as travel, too.
- There are some gray areas – such as parking garages or apartment rentals – and often you won’t know until you receive your credit card statement.
However, you should not worry about whether Jordan has the technology to code your hotel or restaurant charges in the proper category.
If a merchant accepts Visa – both Chase Sapphire cards are Visas – then Visa will have assigned that merchant a category code that reflects the type of business. A hotel in Jordan that accepts Visa will count as a travel expense.
See related: How to find a business's merchant category code
Credit card acceptance in foreign countries
The larger concern, however, is whether the hotels and restaurants you are visiting accept credit cards.
- In the U.S. and Europe, acceptance of credit cards at such places is almost universal.
- In many advanced countries, cash accounts for less than half of all transactions.
- In Sweden, for instance, fewer than 20 percent of transactions take place in cash.
- In India, however, the figure is closer to 98 percent.
I couldn’t find a figure for Jordan, but my guess is that the figure is closer to India’s than to Sweden’s.
Travel guide Lonely Planet says of Jordan: “Most major credit cards are accepted at top-end hotels and restaurants, travel agencies, larger souvenir shops and bookshops. Commissions of up to 5 percent may be added to the bill.”
You’ll want to consider whether paying a premium to use a card still makes sense.
And you’ll definitely want to plan to get cash for those circumstances when paying with plastic isn’t available.
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