Follow these 5 credit card rules when traveling abroad

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It is advisable to use credit cards for making payments while travelling abroad. This is because they offer convenience, protection and security which is not guaranteed while using traveler’s cheques or foreign currency. At the same time, many HDFC credit card offers give you generous travel rewards or cash back rewards every time you use your credit card. It is a wise option to use credit cards while traveling abroad, but there are some things you need to keep in mind.

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Fraud protection

Banks and credit card companies try to minimize their losses due to fraud, because they suspend an account when a credit card is used in an unusual location. If you are using your credit card in an exotic vacation, your bank may interpret that your card information has been stolen by an overseas hacker. It can be very frustrating to find out that a hold has been placed on your card when you are trying to make a payment at a gas station or a hotel.

In order to avoid such a situation it is advisable to notify your bank or credit card company that you will be traveling abroad. They should be informed about your travel dates and the country or countries that are on your itinerary. It is also advisable to notify them of any stopovers on the way even if it is just to change planes. This is because you may end up shopping at the airport duty free shops or even miss a plane and have to put up in a hotel at this stopover location.

Acceptance

The cards like American Express and Visa are widely accepted around the world. However, Master credit cards are not accepted by all foreign merchants. At the same time, some businesses abroad accept only debit cards, official currency of the country or local cheques. If you wish to make payment using your credit cards then you should shop where all major credit cards are accepted.

Customer service and travel assistance

Most credit card companies offer free travel assistance program. Such program features may include some or all of the features like travel accident insurance, purchase protection along with car rental loss or damage protection. Along with these some major credit cards also offer additional protection like express shipping for replacement of credit cards, legal assistance and referrals to medical facilities. Services of different banks and credit card companies are different so you should conduct a research regarding the services provided by your card company before you embark on your journey.

Foreign transaction fee

Many people are unaware that most credit cards charge a fee of 1-3% of the purchase price on every purchase that you make using the card internationally. Here you need to bear in mind that these fees are not for currency conversion, even  if you make the transaction in your own currency this fee will be charged. You also need to bear in mind that sometimes foreign transaction fees are charged even on purchases made inside the country if the company is a foreign one.

Cash advance fees and cash advance APR

If you are depending on your credit card to withdraw cash from an ATM, you should keep in mind that there will be a cash advance fee amounting to around 2-5%. At the same time, you will also have to pay a charge of usage fee for using an ATM of a bank where you don’t have an account. This can add up to a large amount particularly if you are frequently using your credit card at ATMs. It is always advisable to use your debit card at ATMs to avoid cash advance fees.

Apart from the cash advance fees, there is a higher rate of interest for cash advances than they  charge for purchases. Although it is true that if you pay your credit card bill in full every month there will be no interest charged on it, but that is not the case with cash advances because they accruing interest from the time since the cash is withdrawn. Withdrawing cash using your credit card should always be your last resort.

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