For current students or recent grads headed overseas, keeping close tabs on debit and credit card transactions can help to avoid a financial mess while far away from home.
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While consumers should always be mindful of swiping abroad, students and grads with a tight budget and a low credit limit should be especially cautious of how international transactions can affect their bank accounts and credit history.
“It’s even more important when traveling abroad because you’re likely not familiar with the ins and outs of foreign banking systems and common practices in other countries,” says Rebecca Hall, a financial advisor with Ameriprise Financial. “As a foreigner, you may be a target for fraud and could be taken advantage of simply because you’re unaware of what is customary.”
Although debit and credit cards are convenient, students need to learn the exchange rate for local currency compared to U.S. dollars to find out the actual cost of their purchases, says Mona Miller, director of Study Abroad Programs for GlobaLinks Learning Abroad.
“When you use plastic, it’s easy to overspend and overlook the impact of foreign currency exchange rates,” she says. “As you travel, it is smart to set up online access to all accounts and monitor each for service fees and interest charges.”
Here are four tips financial experts say grads and students should keep in mind when using debit and credit cards overseas.
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Tip No. 1: Tell Your Bank /Credit Card Issuer About Your Trip
One of the ways banks watch out for fraud is by noting unusual shopping patterns, and credit card issuers might get suspicious when overseas charges pop up on an account if users haven’t alerted them first, warns credit card expert and author Beverly Harzog.
“This could lead to a fraud alert on your account and you wouldn't be able to use your card, so it's just a good idea to let your banks know where you're going and how long you'll be there,” she says.
Tip No. 2: Bring a Variety of Money Resources
The safest way to manage finances abroad is to diversify them by using a mix of ATM cards, debit cards, traveler’s checks and credit cards, recommends Miller.
“If your money runs out and you have a credit card, you may be able to access funds through your credit line,” she says.
The magnetic strip on the back of most credit and debit cards can be problematic in some areas of Europe, where cards often have a smart chip installed rather than a strip, explains Ben Woolsey, director of Marketing and Consumer Research for CreditCards.com.
“Generally [European merchants] can handle cards with magnetic strips, but where people run into trouble is with smaller merchants or places where there’s not a person standing there, say if you’re buying a train ticket at a kiosk or you’re in a parking garage where you’re sticking a card in the meter, those are not set up to handle cards with a magnetic strip--it’s good idea to have a card that’s European compliant.”
Tip No. 3: Know Foreign Transaction Fees and International Banking Associations
Credit card and ATM transactions can lead to service fees in addition to the monetary difference in the current exchange rate--some foreign transactions can tack on an extra 2-3% in fees for each purchase.
“Debit and credit transaction fees should be compared so you can decide to use the lowest cost option when traveling,” says Hall.
Just like in the U.S., consumers can get hit with extra fees when going to an ATM outside of their bank’s network and it’s important to research any alliances major banks have with international ATM networks, says Woolsey.
“You can typically find that on a major bank’s website and if not, you can just call the toll free number on the back of the card and find out what the situation is,” he says. “If you have a card with a smaller bank or a credit union, they may not offer those types of alliances.”
Tip No. 4: Prepare for a Lost/Stolen Card
In the case of theft or card loss, students should contact their bank or credit card issuer immediately to keep fraudulent charges to a minimum.
“It is useful to make a photocopy of both sides of each of your credit and ATM cards so that you have the account numbers and phone numbers to call in case they are lost or stolen--keep these photocopies in a separate, secure place, such as a safe where you are staying,” says Miller.
Students will need the collect customer service number of their bank or credit card, as the toll free number on their card will not work outside of the U.S., says Woolsey.
“Call customer service and report the lost or stolen card—it’s really critical to have all of that information that you can access and keep it separate from your credit cards.”