Not sure if it's a good idea to use a credit card when traveling? So read this post and find out everything about this payment method, from how to use it to fees, benefits, which card is best and more!
As someone who travels a lot, I'm in several Facebook groups about travel, where people talk about different topics, from destinations to accommodation and tours. There is one topic, however, that has always intrigued me, which is the use of credit cards when traveling.
In general, people agree that it is a error travel and take credit as a form of payment. And, although I understand why they think this way, I need to say that I do not agree with this statement. Of course there are disadvantages to using this payment method, but by my reckoning normally the benefits end up being greater.
Reading the comments on this topic, however, I realized that most people don't really understand how the card works abroad. Many talk about “very high rates“, and in fact you pay the same fee as the prepaid card (the famous visa travel money), but you still get points.
With that in mind, I wrote this post clarifying the main doubts about using a credit card when traveling. I explained how it works, what the fees are, how the exchange rate is calculated and the advantages and disadvantages of this payment method.
If you're in doubt about which card to take on your next trip, keep reading!
How to use your credit card when traveling
To use your credit card abroad, you first need to check if it is enabled for international purchases. In the past you had to ask specifically for a card with this feature, but nowadays it is very common and the chances are high that your card can make purchases of this type.
Additionally, some banks also require you to make a travel warning, which consists of specifying the dates that you will be outside the country and that the card will be physically used abroad. This ensures that, in the event of a charge in another currency and in another country, your card will not be blocked due to suspected fraud or cloning.
Apart from these two details, a travel credit card works in the same way as in national stores. You place the card in the machine (or use the touch), enter your password and the purchase will be on your invoice at the end of the month. please note that purchases abroad must be made in another currency. If the store offers to convert it to reais automatically, so that you don't pay fees, there is a high chance that the card will not pass.
Rates
Many people do not consider using this type of payment when traveling abroad because they believe that there are many fees and that they are too high. In truth, The rate applicable to purchases in foreign currency is the IOF, which is currently 6,38% for credit cards.
For a purchase of US$100, for example, you will see charges on the invoice: the purchase itself and separately the IOF for that purchase.
Your card may even have other fees, such as an annual fee, for example, but they are not specific to purchases abroad. In this case, the only extra fee is really the IOF.
Exchange
The most important information you need to know about exchange rates when talking about credit cards is that, as it is a value determined by a bank, the quote will always be unfavorable. It doesn't matter that in stores that sell coins you can get a much better value, your invoice will use the worst possible quote, lol.
In second place, all currencies are first converted to US dollars and after become real. And yes, as you can imagine, as you go through two conversions, the final value is even worse than expected.
Lastly, it is important to understand that which will The dollar value used depends on the day you pay the invoice. On the day of purchase, the purchase price is only provisional, it will be updated according to the currency variation. When closing the invoice, a value is assigned to the dollar and it is with this that all calculations are made to arrive at the total that must be paid. If you pay the invoice ten days later, however, and the dollar has already changed in price, the difference is debited (or credited) on your next invoice.
For years I thought the value of the dollar was that of the day of the closure on the invoice, until I saw an extra charge one month and discovered that was why. There are cards, however, that offer the benefit of freezing the dollar for the day of your purchase or the day of closing the invoice.
Advantages of using a credit card when traveling
The fees and exchange rate for this payment method may make it less attractive, but there are numerous advantages to using a credit card when traveling. The first, and my main reason for choosing credit every time, is the air miles.
With every dollar spent you accumulate points, which can then be transferred to mileage programs such as LATAM Fidelidade (formerly Multiplus) or Smiles and then exchanged for airline tickets. I have already obtained numerous “free” tickets using these programs.
Furthermore, despite the IOF being higher in relation to cash, there are two reasons to still choose credit: It's easier to control your expenses, as they are detailed on the invoice; It is is safer, since at most you lose (or have your card stolen), and then just contact your bank and cancel it, in addition to canceling possible undue charges. In the case of money, if you lost it, it's gone!
Lastly, some credit cards, such as Mastercard Platinum or Visa Gold, offer a free travel insurance if you buy airline tickets with the card. Depending on the situation, this insurance may even extend to the rest of your immediate family. That’s already quite a saving! I already told my experience using Mastercard insurance in this post.
Disadvantages of using a credit card abroad
It is undeniable that there are disadvantages of using credit cards out there. As I already mentioned, the IOF rate for cards is higher than for cash, and instead of paying 1,1% you end up paying 6,38% per purchase. Furthermore, as the value of the dollar that will be used by the bank is that of the day the invoice is paid, You can't know exactly as will cost your purchases until payment time. If the dollar increases compared to the days of your trip, there is nothing you can do but pay the difference.
In addition, there are physical problems: you could lose the card, or it could be stolen or cloned, rendering it useless. As you won't be at home, you won't be able to receive a replacement.
If you are going to use credit to make ATM withdrawals, there are two other disadvantages: the withdrawal rate is very high for this type of card, and it may not be supported depending on the machine. My Mastercard which is credit e debit, for example, is almost never accepted, while cards from the same bank, same category and same brand that are only credit work.
After all, is it worth using a credit card when traveling?
Here I need to disappoint you and tell you that there is no correct answer, only what is best for you. you and for the your trip. It may be that you are on a limited budget and it is better not to risk the variation in the dollar, it may be that you want to earn miles and then the card would be the best option, everything depends (worst answer, I know).
What I do is take my credit card as my main source of payment, but also I take another credit just to ensure that I will be able to withdraw money (since mine is actually credit and debit and it usually causes problems when withdrawing), I carry travel money that I can top up online in any emergency e change some money at the airport or at an exchange office at the beginning of the trip. This way I'm prepared for anything!
If you're not sure which option is best for your adventure, Here on the blog there is a post comparing credit cards, travel money and cash. Give it a read and it might help you 🙂
What is the best credit card to use abroad?
There is a correct answer here, which is The best card to use on a trip is the one that gives you the most points for every dollar spent. According to Best Destinations website ranking, currently this card would be the Visa Infinite from Porto Seguro, which guarantees between 2 and 2.2 points for every dollar.
If you are unable to pay the annual fee for a card of this type, however, there is no need to worry. You can still take advantage of this payment method even with a simpler card! The one I use, for example, is not even one of the first setenta placed on the list, and I have already taken several trips using my points.
If you want to use a credit card when traveling, choose one that you can afford (or try to negotiate a reduction in the annual fee with your bank) and, if you want to add more points, Use the tips in the post about collecting miles here on the blog.
And there you have it, all the tips on using your credit card when traveling. Remembering that, like any card of this type, you need to be responsible and control your spending. If you're not used to this, my recommendation is to use a prepaid card to avoid spending beyond your means.
Do you have any questions? Leave it in the comments! 🙂
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