Tips for using plastic overseas

by Center for Personal Finance editors

ATLANTA (8/2/06)�If you're traveling overseas, it pays to do your homework before you leave--particularly when it comes to using credit cards (CNNMoney.com July 26).

Face it--travelers are going to be socked with currency conversion fees somewhere along the way. Banks and exchange bureaus may charge exchange rates of 7% or more to convert your money to local currency. In comparison, credit card fees may seem small, but some card issuers charge a lot more than others for the same transaction.

For example, Bank of America and Citigroup charge a 3% currency exchange fee; on a $500 purchase, that's an extra $15 in fees. American Express charges a 2% fee for overseas purchases, while Capital One doesn't charge any exchange fee.

Despite the fees, credit cards still make sense for travelers who don't want the hassle of finding a local currency exchange bureau at their destination.

And what about debit cards? Again, check the issuer's policy. Some issuers charge the same fee as an overseas credit transaction, while others may charge a flat fee of, say, $5 for using an ATM to withdraw funds, and there may be a currency conversion fee tacked on to that.

Plan ahead for overseas travel:

Call your card issuer before you travel and ask about fees. What's the conversion fee? What debit card fees will be charged for affiliated and non-affiliated ATMs? Or, is there a flat fee for cash withdrawals? If you decide to switch providers, remember that too many credit cards can lower your credit score. Assess the overall benefits of all the cards in your wallet before adding another one to the mix. Tell your card issuer about your travel plans--both dates and itinerary. Large, out-of-pattern purchases may be denied if the issuer thinks your charges are fraudulent.