If you’ve ever struggled with your credit score or history, the chances are you’re probably wary about securing new lines of finance. This is often a false economy, however, as opening lines of positive credit can actually boost your score and standing in the eyes of individual lenders.
If you take out a new credit card, however, you’ll need to use this responsibly if you are to have the desired effect. This can be challenging at the best of times, but the pitfalls become even more significant when you look to use your card abroad and encounter the complexities associated with this.
In this article, we’ll offer some advice on how to use your credit card abroad while minimising the costs with potential transaction fees.
Let’s start with the basics, as in some respects your use and the cost of credit will depend on the type of card that you select. If you secure a prime credit card with a high limit, for example, you’ll run the risk of overspending while incurring considerable interest repayments and transaction fees.
So, the first thing to keep in mind is the credit limit that’s available through your card. We’d recommend choosing a card with a relatively low threshold, or at least one that is well within your financial means.
Similarly, it may also be worth seeking out credit cards that will allow you to spend without accruing interest for a fixed period of time. Some providers offer a period of interest-free credit on selected cards, which can dramatically reduce the cost of borrowing for customers.
You may also want to look for a ‘no foreign transaction fee’ credit card, which minimises the charge applied by banks and lenders. According to The Pew Charitable Trusts, 57% of all credit cards apply fee transactions to overseas purchases, with these typically ranging from 2-3% of each buy.
This can therefore save you considerable sums of cash, depending on the precise region of the world that you visit.
Ultimately, saving money through any medium requires a great deal of forethought and common sense, with a series of small and simple steps capable of delivering significant results.
So, just as you’d calculate the amount of money you could afford to borrow before taking out a cash loan, you should contact your credit card provider prior to leaving the country and spending abroad.
This serves a dual purpose. Firstly, it ensures that your providers do not cancel or suspend your cards while you’re abroad, in the belief that fraudulent activity is taking place.
Secondly, it will enable you to open discourse with your lender and identify the best contact number for them when you’re overseas. This will make it easier to challenge transaction fees and manage your card use, while ensuring that you fully understand your responsibilities as an overseas consumer.
Let’s face facts; the global economic and geopolitical climate is extremely volatile at present, with Donald Trump’s Presidency and the ongoing Brexit fall-out triggering widespread currency fluctuations.
This can make it extremely difficult to avoid dynamic currency conversions while overseas, while foreign merchants may also take advantage of this by quoting prices in U.S. Dollars (USD) or Sterling (GBP) and then making the switch at an uncompetitive rate.
To avoid this, simply refuse to sign any cheque or receipt not expressed in the local currency. Similarly, use your phone to monitor conversion rates in real-time, and refer to this information when you’re quoted prices.
By presenting a live rate to merchants, you may be able to negotiate a better deal and enjoy a greater return on your capital.