Despite the fact that you finally got that Visa that you’ve been longing for, it’s time to develop a small plan on how to use it when you go traveling to Paris or Tokyo. Since you’re a recent graduate and definitely owe student loans and work an entry-level job, taking care of foreign transaction fees should be in focus. The purpose here is to travel wisely, not harder in order to avoid getting a financial hangover back home.
First of all, find out if your credit card is charging any foreign transaction fees. Good news is that there are a number of cards on the market, such as Capital One Venture or Chase Sapphire Preferred, that do not have any foreign transaction fees. In contrary, standard bank cards usually charge 3%. It doesn’t sound like a big percentage, but what if you think about paying 3% on every hotel or train pass in Europe? If your card charges foreign transaction fees, apply for a different one prior to booking plane tickets.
While you’re using your card, pay attention to choosing the local currency. When you’re going to use your credit card, it is quite likely that the terminal will ask you to convert the cost into dollars. While it might look like a convenient option, it is not. It’s called dynamic currency conversion and merchants use it with bad exchange rates, which means that you’ll actually give them 5% to 7%. All you need to do is to choose ‘no’ in the conversion window and let your bank do the rest.
Notify your bank about the dates of your travels to avoid fraud freezes. Nothing is worse than being in a bakery in Berlin and having your card declined by an algorithm considering your croissant purchase suspicious. Fortunately, there is a way out – most apps, such as Amex or Discover, let you put a travel notice within a second. Don’t forget to make it at least a week before your journey.
Keep track of your expenses while traveling abroad. Sometimes it’s easy to forget about your budget and end up spending too much on alcohol and gifts. For that reason, consider your credit card as a debit card and repay your debt right away to avoid interests and save some money for your future travels.