Expat guide: Maximize US credit card while living overseas

Make sure to pack a card with the right rewards, perks, chip – and no foreign fees

Gina Ragusa
Personal Finance Writer
whose work has appeared in TheStreet, Mic and elsewhere

Expat guide: Maximize your U.S. credit card while living overseas

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Moving abroad and looking for a credit card that can support your adventure?

Throw many of the rules you use stateside because credit card use as an expat is an entirely new ballgame.

Why? In some cases, it could mean new fees, but you could also be missing out on sweet travel or cash back benefits by using a card that doesn’t provide the right travel rewards or worse – one that doesn’t reward your shopping behavior in your new homeland.

Plus, you want to select a card that has the same protective benefits, such as a solid return policy, and one that doesn’t charge you an additional fee for purchases while living abroad.

Here’s your checklist to keep – and take advantage of – your U.S. card while living abroad.

Moving abroad: Your credit card checklist

Beware of foreign transaction fees

The same credit card you use freely at home may charge you a fee for making purchases out of the country. “Before you move, make sure you aren’t going to be charged foreign exchange fees,” Robin Saks Frankel, personal finance reporter for Bankrate, said.

Foreign transaction fees usually tack on 3 percent of each purchase.

The best way to avoid this fee is to do your homework before you leave the U.S. “Unfortunately, you can’t just call your credit card company and ask them to waive the fee after the fact,” Frankel said.

If your current card falls into this category, consider applying for a card that doesn’t charge foreign transaction fees.

And remember to always pay in the local currency, as that option will give you the best exchange rate.

Select a card that fits your new international life

Next on your list is to determine the kind of rewards you’ll want depending on the lifestyle you plan to embrace while living overseas.

If you’ll be traveling a lot, or back and forth between the U.S. and abroad, maybe a travel card will be the best way to go – and any solid travel card will charge no foreign transaction fees.

Good travel cards in this category include Chase Sapphire Preferred and Reserve, American Express Platinum and Bank of America Travel Rewards.

However, not all expats have the desire (or the means) to wander, which could make a cash back card ideal to help cover everyday expenses.

And although most credit card users seek a card that offers the most bang for their buck on gas and groceries, make sure cash back rewards apply to retailers and stores in your new home country.

Unfortunately, finding a cash back credit card without foreign transaction fees may be a little limited, says Brian Kelly from The Points Guy. “Most cash back cards have no annual fee, and most cards without annual fees do charge a foreign transaction fee.”

  • One good option is the Uber Visa card, Kelly suggests, with no annual fee and no foreign transaction fees. The card offers 4 percent cash back on dining, 3 percent on hotels and airfares, 2 percent on online purchases and 1 percent on everything else. Cash back is earned as points, but you also can redeem your cash back toward a statement credit.
  • If you’re unsure about which way to go and you plan to travel extensively, maybe a flat-rate travel or cash back card is best. Options include Capital One Quicksilver and Capital One Venture Rewards.

Also to keep in mind: You may not find it as easy to compile reward points in societies where cash is king.

When living in Japan, Kelly recalled the challenge of building monthly rewards points because Japan was mainly a cash-based society.

He ended up making his parents authorized users on his cards to rack up points and then they would slide him the cash for what they spent each month.

Make sure card benefits apply on overseas purchases

You’ll also need to make sure the same purchase protections you have in the U.S., including extended warranty, price protection or guarantee protection, apply while you are living in another country.

Many cards extend purchase protection to items bought abroad, but make sure yours is one of them before you make a large purchase overseas. Check your benefits guide on your card or call your issuer.

The AmEx Platinum and Business Platinum cards both include this coverage for purchases made worldwide, for example. “Just be sure to check before you buy so you aren’t unpleasantly surprised after the fact,” Kelly says.

Your card may not work the same overseas

Beyond fees, your card may work differently outside the U.S., Frankel says.

“Some countries only offer the chip-and-PIN option, which could present a challenge because we have chip-and-signature in the U.S.,” she says. “So, if you are at a train station and the machine that allows you to purchase tickets is unattended and only accepts a PIN, you could run into problems.”

Remember: Your debit card, which is connected to your checking account, has a PIN, but not all credit cards readily offer a PIN in the U.S.

Tip

Tip: Don't leave the country without carrying a chip-and-PIN card with you. Issuers that offer chip-and-PIN cards include Barclays, Bank of America, PenFed Credit Union and First Tech Credit Union.

Let your card issuer know you’re moving overseas

While working as a teacher in South Korea after graduating from college, Jake Hickey of Pleasant Valley, Michigan, opened a PNC Premier Traveler Visa Signature card to take advantage of the 2 miles for every dollar spent, no foreign transaction fees and no annual fee for the first year.

And while he didn’t encounter any PIN issues in the nearly four years he lived in Asia, Hickey alerted his bank that he was moving abroad in order to avoid having his account flagged for fraud.

Some issuers don’t need to know your travel plans in advance now, but if you want to make sure your card won’t be frozen for using it constantly overseas, call your card issuer.

Don’t completely abandon U.S. ties

Although you’ve committed to moving overseas, you don’t want to entirely ditch your U.S. identity.

 

Video: 5 credit card questions to ask before traveling overseas

That means maintaining a U.S. bank account, which really comes in handy to pay your credit card bill. And keep at least one U.S.-based checking account that allows you to perform an electronic fund transfer to your credit card company to avoid foreign transfer fees.

If you need to transfer money from abroad to your U.S. bank account, a few low-fee options include PayPal and CurrencyFair.

Amy Johansson learned this the hard way after moving to Höganäs, Sweden, in 2011.

“I have a steady and decent income here in Sweden, yet I have to pay all these transfer fees to my American bank in order to pay my credit card bill every month because I have to transfer funds to my American bank,” she says.

You’ll also want to maintain a U.S. address because most banks won’t service you without one once you move abroad.

“Post office boxes and mail forwarding services are not solutions for this as banks want proof of residence for a U.S. address,” Marylouise Serrato, executive director for American Citizens Abroad, said. “Your account may be closed because of a lack of a residential address in the U.S.”

Keeping a U.S. address and bank account also will help you to maintain credit history, pay bills and use automatic deposit for Social Security checks and tax refunds, for example.

Tip

Tip: Maximize use of your account by tapping into your financial institution’s online banking tools. Sign up to receive electronic statements and online bill pay so you can take care of your U.S. bills from anywhere in the world.

Use concierge services to navigate your new home

While you can use your credit card concierge service to book concert tickets in London or make a dinner reservation in Hong Kong, you also can use this service for more practical matters.

“Concierge services are a great way to get recommendations for services and restaurants, especially when you’re traveling to a new or unfamiliar area,” Aaron Aggerwal, assistance vice president of credit cards for Navy Federal Credit Union, said.

“If a cardholder has concierge services included in their card benefits, then he or she can access the service wherever she lives or visits,” Mastercard spokeswoman Rachel Gillen said.

If you are looking for a dentist or even a school, you can contact the concierge service to conduct research and deliver results.

Plenty of cash back and premium rewards cards offer free concierge services. While often unused, this perk can make the difference when you’re getting adjusted to your new habitat.

“Since it’s a global service, as long as the cardholder is eligible, they can use the concierge for pretty much anything they need,” Gillen added.

See related: Living abroad? 3 steps to keep your US credit alive, Get cash while traveling abroad, with no fees, Concierge services: An exclusive, little-used card benefit


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Updated: 08-19-2018