On a foreign trip, should I use credit cards at ATMs?
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Dear Cashing In,
I will be in Paris and Normandy and other parts of France. I have a credit card with a chip and PIN, but not a debit card -- they are not available yet. Is there an option on ATMs to withdraw cash from a credit card, or does it have to be linked to a checking or savings account? We do not have access to an ATM card with a chip. -- Marcia
There has been a lot of publicity lately surrounding chip cards and foreign travel. EMV cards offer enhanced security, which is why U.S. card issuers are adding EMV chips to traditional magnetic stripe cards.
Europe and other parts of the world have had these chip cards for years, and credit cards with chips tend to be more widely accepted in Europe than those with only magnetic stripes.
But let's be clear: You do not need a wallet full of chip cards when you travel. In fact, you could get by just fine without taking any chip cards. You're not going to wind up doing the dishes to pay off your meal at a fancy Paris restaurant.
Even if you have the latest and greatest U.S. payment technologies when you travel, there is no guarantee that they will all work all the time at foreign merchants. That's just the way it is, so the best plan is to have a few alternatives.
Let's break this down by the methods of payment that are most common to Americans:
Credit cards. Because of upcoming changes in the rules for who pays for losses connected to fraud, U.S. card issuers are replacing magnetic-stripe-only cards with chip-enabled cards. Chip cards also have magnetic stripes but you can use them at chip-only terminals in Europe, which could make everyday purchases easier.
In general, cards with chips will work more often than cards with only magnetic stripes if you are overseas. However, foreign merchants know that Americans still have cards that have only magnetic stripes, so those are still widely accepted.
U.S. cards sometimes are still troublesome at unmanned kiosks such as those you would find at parking garages or toll booths, because card issuers have chosen for the most part to configure the cards without PINs. Kiosks often ask for PINs.
Marcia, you definitely do not want to use a credit card at an ATM, whether it is in the U.S. or abroad. That's because your card issuer will treat the withdrawal as a cash advance, which is subject to both a fee and immediate, high interest rates.
Debit cards. In the U.S., these tend to be popular. Almost two-thirds of Americans use debit cards, according to a December 2013 Mercator Advisory Group study. You enter a PIN when you use the card at a merchant, and the money is deducted from your bank account.
Internationally, you could use debit cards at retailers, but you probably wouldn't want to. That's because most debit cards come with foreign transaction fees, which are typically a percentage of the purchase price. A much better idea is to use your bank's debit card at an ATM, where the charge is typically a fixed fee of a few dollars when you withdraw the money.
U.S. banks are slowly issuing debit cards with chips, but even debit cards without chips work at foreign ATMs. Call your bank to alert it that you are traveling abroad so it doesn't block the transactions.
Cash. Wherever you are, you never want to carry too much cash, in case of pickpockets. But when traveling, cash is almost universally accepted. Internationally, many merchants prefer cash.
International payments can be confusing. But my guess is you will be surprised how far you can go in France and elsewhere with the cards you currently use here in the United States.
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