Using a credit card for overseas spending can be convenient and beneficial, but it's important to use it wisely to avoid unnecessary fees and ensure a smooth experience. Here are some tips on how to best use a credit card for overseas spending:
Choose the right card
Before your trip, select a credit card that is well-suited for overseas spending. Look for cards with no foreign transaction fees, competitive currency conversion rates, and rewards or benefits that align with your travel needs.
Notify your bank
Inform your credit card issuer about your travel plans. This can prevent your card from being flagged for suspicious activity when used in a foreign country.
Research currency exchange rates
Familiarise yourself with the current exchange rates to have an idea of how much you'll be spending in your home currency.
Avoid dynamic currency conversion rates
When purchasing, decline the option of dynamic currency conversion offered by merchants. Dynamic currency conversion (DCC) refers to paying for an overseas transaction in your converted local currency rather than the foreign currency itself.
Initially, paying in your local currency while overseas might seem like a more straightforward way of tracking your travel expenses. However, this isn’t true because not only is the currency conversion rate poorer, but your card will also incur extra unnecessary fees on top of the transaction. You should let your credit card company handle the currency conversion, as it often results in better rates.
Pay in foreign currency (AKA your destination’s local currency)
When given the option, choose to be charged in the local currency rather than your home currency. This can help you avoid additional conversion fees like the DCC fee mentioned above.
