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Credit cards replace travelers checks for Americans overseas

Summary

Popularity of using major credit cards for Americans overseas instead of travelers’ checks has increased recently.

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Credit cards and debit cards are increasingly taking the place of travelers checks for Americans heading overseas, the Oakland Tribune reports.  Experts say the popularity of credit cards and debit cards among travelers is due to the favorable exchange rates and other benefits offered by plastic.

Compare Low Interest Credit CardsTravelers are finding that credit card and debit card transactions offer better currency exchange rates due to the fact giant credit card companies including Visa, MasterCard and American Express process million of transactions daily, which puts them in position to secure better exchange rates than those for individual transactions.

Security is one of the other benefits of using a credit card overseas. If there is a problem with a traveler’s purchase, such as not being provided with the service they were promised, a credit card offers protection if a dispute is necessary.

Also, credit cards have a maximum liability of $50 for unauthorized use, while there is generally no liability if the credit card’s disappearance is reported before any unauthorized charges occur.  Furthermore, most banks will send a vacationer emergency cash and an emergency replacement credit card in a foreign country in case of loss or theft.

Meanwhile, a debit card lets travelers take money out of an ATM, which can be much faster than waiting in line at a bank or money exchange counter to cash their traveler’s checks.

Another benefit to using a credit cards or debit cards overseas is that the itemized list of charges on a statement can help travelers easily review their overseas spending.

However, some credit cards and debit cards charge travelers foreign transaction fees to cover the bank’s costs associated with foreign transactions.  These foreign transaction fees are added to the standard currency conversion rate, which amount to 1 percent for Visa or MasterCard credit card or debit card transactions converted into U.S. dollars from a foreign currency.

For American Express transactions overseas, there is just a 2 percent currency conversion rate with no addition fees.  For travelers looking to avoid foreign transaction fees, Capital One credit cards do not charge these fees for overseas transactions.

Experts recommend travelers call their various credit card companies to find out about which plastic offers the lowest fees before going away on a trip.  Additionally, experts say, travelers should ask about out-of-network ATM fees for using a debit card when on a trip.

But since a credit card or ATM network may not work in the place a traveler is visiting, experts note that carrying a small amount of travelers checks as a back up may be a good idea.  A credit card may still be used for big purchases such as for hotel rooms, a debit card can allow the traveler to get some walking-around cash in the local currency from an ATM, while traveler’s checks can be helpful in a pinch.

Like credit cards and debit cards, traveler’s check can carry extra fees.  While banks may offers traveler’s checks for free, some tack on an initial charge from 1 percent to 4 percent of the check amount.

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Credit Card Rate Report Updated: July 8th, 2020
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