Traveling overseas with your credit card

If you're an avid traveler, you know that it can be risky to carry large amounts of cash or traveler's cheques on your person. Credit cards are therefore a smart choice for anyone going overseas for an extended amount of time. However, there are several things you should know about using a credit card in foreign countries.

Do some research before you depart on your trip to ensure that you don't fall victim to scams, and so you can make the most out of your credit card usage while you are gone.

Many credit cards have foreign exchange fees of 2-3 percent, and these fees add up quickly. Check for cards from Capitol One that don't have any foreign exchange fees; on extended trips, these cards can save you quite a bit of money. If you can, you may even want to look for a rewards card with a reward that appeals to you, like air mileage or cash back, since chances are, you'll have the opportunity to earn plenty of rewards.

You'll want to look up common credit card scams before you depart as well. Be particularly wary of Dynamic Currency Conversion, a scam where merchants offer to carry out a transaction in U.S. Dollars instead of the local currency. This may sound like it would make the purchase easier, but you'll end up paying more money due to the merchant charging you hidden exchange rates that you probably won't notice until you do the math later.

You may also want to become acquainted with the type of credit card used in the countries you'll be traveling to; not every nation uses magnetic strips like the United States.

In Western Europe, for example, credit cards have a chip-and-pin system for extra security. You can certainly use your normal credit card in Europe, but to ensure that your card belongs to you, any merchant will ask you to present additional identification. So make sure that you always have your passport with you whenever you leave your hotel room; you could find it difficult to make purchases otherwise.

-Seth Berger