Smart Money Podcast — The Best Ways to Use Credit and Debit Cards When Traveling Abroad

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn how to optimize debit and credit cards abroad, avoid fees, and maximize rewards for stress-free international travel.

What are the best ways to use debit and credit cards while traveling internationally? What are best practices for avoiding fees and maximizing card benefits abroad? Hosts Sean Pyles and Meghan Coyle discuss strategic card usage and essential financial tips for international travel to help you understand how to enjoy a seamless and cost-effective travel experience. They begin with a discussion of the importance of preparing for holiday travel, with tips and tricks on carrying multiple credit cards for redundancy, avoiding pitfalls of cash advances, and the benefits of traveling during off-peak times.

Then, travel Nerd Craig Joseph joins Meghan to discuss practical tips for managing credit cards and currency while traveling internationally. They discuss the advantages of using cards for their rewards and protections, the necessity of charging in local currency to avoid conversion fees, and obtaining local currency before departure to minimize ATM and currency exchange fees. This episode offers a comprehensive guide to help your international travels stay financially savvy and stress-free.

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NerdWallet stories related to this episode:

16 Best Travel Credit Cards of September 2024

10 Credit Cards That Provide Travel Insurance

7 Things to Know Before Getting the Chase Sapphire Preferred

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

This transcript was generated from podcast audio by an AI tool.

Sean Pyles:

We're coming up on what many of us know as the most wonderful time of the year. Cue Andy Williams — and Mariah Carey, for that matter. Sure, it's only September, but the holiday season will be upon us sooner than you think. And for a lot of folks, that means a lot of spending, especially on holiday travel.

Craig Joseph:

As long as there's a mobile signal, you can now use a card in a lot of situations where you previously couldn't. That means you don't have to carry as much cash, which is obviously safer. And credit card purchase protections cover you from fraud in case you swipe the card in the wrong place.

Sean Pyles:

Welcome to NerdWallet's Smart Money podcast. I'm Sean Pyles.

Meghan Coyle:

And I'm Meghan Coyle.

Sean Pyles:

And this is our fourth and final episode of our Nerdy deep dive into holiday travel and how to save some scratch before sitting down at the family and friends' holiday dinner table.

Meghan Coyle:

Or in this case, what you should know about using your debit and credit cards abroad if you're taking an international trip for the holidays.

Sean Pyles:

That's been on my bucket list for years. I've heard traveling to Japan around Thanksgiving is especially lovely—fewer crowds, cheaper airfare, and you also get to experience autumn in Japan. It sounds incredible.

Meghan Coyle:

Oh man. Yeah, I went in October last year. You have to do it.

Sean Pyles:

Jealous.

Meghan Coyle:

I also spent New Year's in Mexico last year, which was super fun, but I did not strategize with my cards correctly and did not get enough pesos. So all of our friends ended up pooling together as many pesos as we had, and only a few people had cards that worked at the ATM.

Sean Pyles:

Oh, no.

Meghan Coyle:

I could have done better. I really could have. I want to make sure listeners do not make the same mistakes.

Sean Pyles:

All right. Well, we want to hear what you think too, listeners. To share your ideas and experiences around holiday travel with us — the good, the bad and the insanity — leave us a voicemail or text the Nerd hotline at 901-730-6373. That's 901-730-NERD, or email a voice memo to [email protected]. So Meghan, who's going to help us finish off this holiday travel series?

Meghan Coyle:

Today we're talking with our fellow Nerd and travel expert, Craig Joseph.

Sean Pyles:

That's coming up in a moment. Stay with us.

Meghan Coyle:

Craig Joseph, glad to have you as our guest today.

Craig Joseph:

Hey Meghan, glad to be here.

Meghan Coyle:

So Craig, tell me, what are your holiday travel plans this year?

Craig Joseph:

This year it looks like I'll be taking a road trip with some friends to a cabin in the mountains of Western North Carolina over Thanksgiving.

Meghan Coyle:

Oh wow. It's a Friendsgiving.

Craig Joseph:

Friendsgiving, that's exactly it. So each person picks one meal or one dish that they like to make, and they focus on that. Then all of a sudden you've got five or six or seven meals to complete a dinner, and yeah, it should be a good time.

Meghan Coyle:

And you're driving from Florida to North Carolina?

Craig Joseph:

Oh yeah. These days I'm not generally one for being in airports over the holidays if I can avoid it, but I love road trips. So it's about a 9 or 10-hour drive to get to Western North Carolina. So think of it like leaving early around breakfast time, then you can be up there by dinner.

Meghan Coyle:

That doesn't sound too bad at all, and you get to miss all the crowds at the airport. So that sounds doubly awesome.

Craig Joseph:

That's it exactly. When I do travel nowadays, it's almost exclusively on miles and points, and quality redemptions can be hard to find during peak travel periods like the holidays. So I usually try to plan to travel during the shoulder season of whenever I want to go internationally, generally anymore that's not much over the holidays.

Meghan Coyle:

A true maximizer in terms of points. Have you ever traveled internationally for the holidays?

Craig Joseph:

Oh yeah. I used to travel almost exclusively over the holidays for a large portion of maybe 10 years in the early part of my career, and that was primarily to take advantage of the Thursday and Friday that I got off from the employers that I've had over my career. While points and miles redemptions can be harder to find domestically during busy travel periods, Thanksgiving is often a slow period outside the U.S., so I found some fantastic opportunities to book award travel over Thanksgiving to locations like South Korea, Thailand, and Colombia. I've even gone to multiple islands in the Caribbean.

Meghan Coyle:

Tell me about your favorite trip abroad during the holidays, which I believe was to South Korea.

Craig Joseph:

Yeah, that's correct. Maybe seven years ago. I spent a week and a half in South Korea over the holidays, doing exactly what we just said—taking advantage of those multiple days off. Ate some great food, unique food. I think the strangest thing I ate was fried silkworm larvae from a street vendor in Seoul.

Meghan Coyle:

Was it good?

Craig Joseph:

It was alright, it was crunchy. It's interesting going places in Asia like South Korea or Japan, where you can't really make sense of the language based on Western language standards. So it was a lot of just pointing and looking at things that looked edible enough and trying them. So I ate some unique food for sure. And I also got to visit the demilitarized zone between North and South Korea, which is in the mountains, and it was the perfect time of year to go because it wasn't too hot.

Meghan Coyle:

That sounds amazing. Hopefully, this is giving our listeners some inspiration to travel internationally this year during the holidays as well. So you are a travel writer here at NerdWallet. What credit cards are you taking with you abroad?

Craig Joseph:

I will preface that question by saying that I have a lot of credit cards. Last I checked, it was around 30 active cards, and there are a few things I consider before loading my wallet to travel internationally. First thing I look at is redundancy. So in case something goes wrong, I want to be protected when I'm away from home. And for me, that means taking multiple cards all issued by different banks. So I'll take a card that's issued by Chase, maybe another one that's issued by Bank of America, maybe even a third one that's offered by Citi or another bank. That way, if there's any issue with one card or bank—say, a fraud alert is put on one card and I temporarily lose the ability to use it—I still have other cards to fall back on.

Second, I try to avoid fees. So that means I only consider cards with no foreign transaction fees. I don't want to be charged every time I swipe my card. Third, I want to earn bonus rewards in categories where I know my spending will be concentrated while I travel, and I already know in advance it'll be places like restaurants or hotels. Lastly, I want a card that offers consumer protections like primary rental car insurance if I'm renting a car or trip delay insurance that could cover the cost of food and a hotel room in case of an unexpected delay.

Meghan Coyle:

Okay, that's a lot of requirements. Out of your 30 cards, are you taking like four or five? A handful?

Craig Joseph:

The last trip I took earlier this year, I headed to Denmark, Iceland, and Germany, and I had three cards in my wallet. The main card that I use is a Chase Sapphire Reserve. That card offers great rewards and bonus categories that I use often. Best-in-class travel protections, things like lost luggage protection and trip delay insurance, and lounge access so I can relax away from the terminal when I'm flying. At the time I was also staying in a Hyatt, so I took my Hyatt credit card with me. But if I'm staying at another brand hotel, say a Marriott, I'll take my Marriott card, and that way I can charge things like food or parking to the room and then pay with my hotel card at the end to earn more points.

Meghan Coyle:

And just so folks know, Chase, Hyatt, and Marriott are NerdWallet partners, but it doesn't affect how we talk about them. You know what I really like about this strategy too is not all vendors in international countries take every type of card. Like, for example, they might not take Amex or you might have to use a Visa, like at the Olympics. This could be a really good way to make sure that you're minimizing the risk in terms of making sure your credit cards are accepted. I do want to ask, what is the right answer to a question that a cashier might ask you, which is: Do you want to charge your credit card in local currency or U.S. dollars? What's the right answer here?

Craig Joseph:

So the answer to that is always charge in local currency. There are two primary types of fees you want to watch out for when you use your card abroad: foreign transaction fees, which are attached to your specific card and effectively a tax on every purchase you make outside of the United States, and the second type of fee is a currency conversion fee. These fees are passed on when you choose to make a purchase in U.S. dollars instead of the local currency. You'll also be subject to whatever the current exchange rate is, which could be unfavorable depending on the rate being offered by your bank.

Meghan Coyle:

One question I think a lot of people have is whether their destination will take credit cards or whether they'll need to rely mostly on local currency. How do you research that?

Craig Joseph:

Meghan, when I'm doing pre-travel research, I usually use Google and especially Reddit. The personal reports you get from Reddit can be super helpful. And personally, I nearly always travel with local currency in my wallet even if credit card acceptance is widespread at my destination. It’s just one more way to prevent things from going wrong when I'm abroad.

Meghan Coyle:

And have you ever been surprised by how prevalent credit cards were abroad?

Craig Joseph:

Card acceptance has definitely become broader over the past decade, particularly since mobile card readers were developed. As long as there's a mobile signal, you can now use a card in a lot of situations where you previously couldn't. That means you don't have to carry as much cash, which is obviously safer. And credit card purchase protections cover you from fraud in case you swipe the card in the wrong place.

Meghan Coyle:

Now there are a few times abroad where I just totally blanked and forgot my debit card, and that's when I did some research into a cash advance. Can you explain what that is and whether that's a good option for people who need cash when they're abroad?

Craig Joseph:

Oh, well, the first thing I'd suggest is to stop forgetting your debit card because that's an important piece of your wallet you want to remember when you travel abroad.

Meghan Coyle:

I know, I know.

Craig Joseph:

But obviously, things happen. Cash advances can be useful if you're in a tight spot, but they should generally be avoided due to some pretty hefty fees. So you'll be charged 3-5% of the amount you borrow, and interest starts accruing immediately on credit card cash advances. And that interest can be 30% or even higher, making this a really expensive way to access cash. But if you are in a jam and you do need to take out a cash advance, be sure to only withdraw the minimum amount that you need and repay that balance as quickly as possible to avoid as much interest as possible.

Meghan Coyle:

Okay. Long story short, I should have just brought my debit card. I won't forget it again. Let's say you do need some local currency. Where should you get that from?

Craig Joseph:

The easiest thing to do for local currency is prepare before you depart. And you can do that by ordering local currency from your bank. It can take a few days for the currency to arrive, so I usually place that order about a week before I travel, and that way it's one less thing to worry about once I arrive at my destination. I'm not stuck potentially paying exorbitant fees at a currency exchange like you'll find at the airport. Those currency exchanges can charge 14% or more than current international exchange rates, compared with around 6% if you get that cash from a bank. So you're being taxed quite a bit if you don't think in advance and end up having to take out cash at the airport for the taxi or whatever it is that you need to purchase once you land.

Meghan Coyle:

And I totally get scared of all of these fees—the ones at the currency exchange, but even ATM fees. What are the fees to be aware of there, and how do you avoid them?

Craig Joseph:

Yeah. So if you arrive without cash, an ATM is generally going to be your best bet. Hopefully, you didn't forget your debit card. But yeah, you need to be aware of those fees when you're using an ATM, and there are a number of fees to look out for, particularly when you're using an ATM abroad. So just like in the U.S., you might be charged a $4 or $5 fee for each transaction you make at an ATM that's out of network with your bank. So think of it like you have a Bank of America debit card, and you want to go and take money out of a Wells Fargo ATM, you're going to be charged a fee for doing that.

And some debit cards will charge an international ATM fee if you use the card abroad, which is usually between 1-3% of the transaction total. If you select U.S. dollars, you might be charged up to 7% of the transaction amount for that currency conversion. So my recommendation and the way I avoid these fees is to get a checking account and a debit card that simply doesn't charge them. So I have a Capital One 360 Checking account specifically for this purpose. There are no foreign transaction fees, and there are no fees for using an ATM abroad. I also already have a Capital One credit card, and the debit card links to the same app as the credit card, so I can see my balances and transaction history easily while I travel.

Meghan Coyle:

And once again, Capital One is a NerdWallet partner, but that doesn't affect how we talk about them. We were just talking with our guest earlier about making sure you download the airline app before you go, and so making sure you have your banking app all set and logged in so you can access it from abroad is also a really good tip. Do you have any other tips for traveling with cards abroad?

Craig Joseph:

Sure. So this goes more into preparing before you travel, but be sure to book your flights and hotels with a card that offers travel protections for things like delays and lost luggage. That protection can really come in handy if you encounter any issues that cause your plans to change or a bag gets lost or damaged. Last year, I had a canceled flight that had me unexpectedly overnight in Chicago, and the trip-delay insurance on my Sapphire Reserve card reimbursed me for food and a hotel room. I just simply had to put the charges on my card and submit receipts to the benefit underwriter, and within a few weeks, I was reimbursed. It was really easy to use.

Another suggestion I'll make is to travel with a wallet or bag that has built-in radio frequency identification protection, known as RFID protection. Most modern credit cards emit a radio frequency that allows them to be used for things like contactless payments, but that signal can also be intercepted by someone in close proximity with a device called an RFID skimmer. What that device does is allows them to intercept the signal coming off of your card and potentially steal your personal details and account information. It's sort of like a digital pickpocket. The wallets and bags with RFID protection aren't very expensive, and they block the signal emitted from your card so it can't be detected by something like an RFID skimmer. Statistically, RFID skimming is probably rare, but it does happen. So this can be an easy safeguard against the theft of your personal information while you're traveling abroad.

Meghan Coyle:

All right. Well, Craig, thank you so much for helping us out today, and best of luck with your road trip.

Craig Joseph:

It was my pleasure. Enjoy your holiday travel if you're hitting the road.

Meghan Coyle:

Oh, and Sean, I have one more story Craig told me after we wrapped. It was too good that I just have to share it. Craig was hiking in remote Turkey once and came across a farmer selling apricots. He didn't have exact change though, so lo and behold, the farmer whipped out a square reader for his cell phone. So you might be pleasantly surprised by the prevalence of card acceptance when you're outside the U.S.

Sean Pyles:

I wonder how many cashless tourists tried to buy apricots from that farmer before he realized that he needed a new solution. You got to love that innovation. Another thing that I appreciate about using a credit card, especially at a restaurant abroad and in Europe in particular, is that they almost always run your credit card at the table in front of you, which just feels more secure than having your card whisked off somewhere to be swiped, which happens in the States typically.

Meghan Coyle:

Totally.

Sean Pyles:

Anyway, Meghan, I don't know about you, but I feel much more prepared for my holiday travel. As in I am grateful that I have no plans to travel by plane this holiday season.

Meghan Coyle:

Lucky duck. I hope our listeners have found these tips and tricks helpful and can use them to make the holiday season maybe just a little less stressful. As we've noted, we can't control some things like weather delays and overbookings, but with some smart planning, you can do a lot to save yourself some cash at this traditionally expensive time of year.

Sean Pyles:

Meghan, we are so grateful for all the advice that you brought to us throughout this series. Thank you. And as you've said to several of our guests, early happy holidays to you and yours. All good wishes for smooth travel days and most excellent family gatherings.

Meghan Coyle:

Thanks so much, Sean, and back at you.

Sean Pyles:

For now, that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio, to automatically download new episodes.

Meghan Coyle:

This episode was produced by Tess Vigeland. Sean helped with editing. Claire Tsosie helped with fact-checking. And a big thank you to NerdWallet's editors for all their help.

Sean Pyles:

And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Meghan Coyle: