Managing your money

Using your credit card abroad

5 min read

Anyone who's ever travelled overseas will likely tell you that paying for things can add a layer of stress to what should otherwise be an enjoyable time. With currency conversion, potential fees and security to deal with, it can be confusing figuring out the best way to plan for it. For many of us, a credit card will play an important role in your travel plans - credit cards are convenient, offer an extra layer of security to your purchases and some even offer perks like free travel insurance and rewards schemes. Here are five tips for getting the most out of your credit card while overseas.

1. Widely accepted

Credit cards in general are widely accepted and make for a convenient way to pay for many items. Visa and Mastercard will likely be the two most commonly accepted cards no matter which country you’re in, however, just as some New Zealand shops don’t take credit cards, make sure you have alternative forms of payment just in case.

Tip: Don’t put all your payment eggs in one basket when travelling. Take a mix of cash and plastic, and if you have more than one credit card, take both so you have a potential backup. You can order foreign cash before you leave New Zealand to make life easier upon arrival and you might also consider using a Cash Passport which can be pre-loaded with up to nine different currencies.

2. Fraud protection

If the worst happens and you lose your card or it gets stolen, you can rest assured that you’ll be protected from any fraudulent use of it. This added layer of security means that, as long as you’ve complied with the terms of service, you’ll not be liable for any costs involved from fraudulent transactions made using your card.

Tip: Should your card be stolen, it’s important to notify your bank as soon as possible in order to limit the damage and get your trip back on track. Make sure you take with you a list of important numbers to call should you need them. Most banks have a separate number to call from overseas.

3. Minimise fees

Nobody likes fees, however, when using your card overseas there will be extra costs involved. The good news is, if you know exactly how fees can be incurred, you can do your best to avoid, or at least minimise, them.

Currency conversion is something travellers have to deal with on a daily basis while abroad, in fact, after a few days some of us can get quite good at the mental arithmetic required to figure out how much that coffee or souvenir will really cost us. Be aware that conversion rates can change without notice on a daily basis and that they’re not set by your bank, but rather the credit card company themselves.

In addition, a currency conversion fee for each transaction - usually a percentage of the total cost after it’s been converted to New Zealand Dollars - needs to be factored into your equations.

When using your credit card to withdraw cash from an ATM there’ll also be an overseas ATM fee of around $5-7.50 per withdrawal. If you’re drawing cash from your credit card (as opposed to your bank account), that money will start accruing interest from that moment.

Tip: Make sure you have an online currency conversion tool handy to help keep track of costs while spending. Some merchants may convert your purchase into US dollars before it gets converted into NZ dollars, check with the merchant before paying if this is something they do.

4. Free travel insurance and other perks

Travel insurance is a must when going overseas, but you might not know that some credit cards actually offer free travel insurance as a perk for card users. You’ll need to check the fine print to see if your card is eligible, but if it is, in most cases the travel insurance needs to be activated before you leave home. This can be done by simply paying for some, or all of your pre-paid travel costs (such as accommodation or flights). Check with your bank before you leave for the exact details of how this works for your particular card.

If you have a credit card with a rewards scheme, remember you’ll also earn points when spending overseas.

Tip: Make sure you keep receipts for your flights or accommodation in case you need to make a claim. Your bank will want to see these.

5. Before you go

Banks are always on the lookout for fraudulent behaviour when it comes to credit cards. They know exactly what to look for, so when they see a transaction popping up on your account from overseas, they might think your card has been stolen and put a block on it. While this is a good thing, it can be inconvenient if it was a legitimate transaction. With this in mind, make sure you drop your bank a note, either online using internet banking or on the phone. Let them know when and where you’re going so they know not to block your card. If your bank uses two-factor authentication, make sure you have any tokens you might need in order to securely access your accounts from overseas. BNZ customers, for instance, will need to take their Netguard card with them, even if they have Netguard Mobile activated on their phone.

Tip: If you haven’t already, get your EFTPOS accounts loaded onto your credit card along with a PIN, that way you’ll also be able to withdraw cash from any ATM displaying the ‘Plus’ symbol.

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