Travel

Handling Money On Trips Abroad

With the value of the dollar falling almost as fast as gas prices are rising, travel this spring and summer is going to cost more whether you vacation close to home or far away.

If you're planning on leaving the country, a credit card will be the least expensive, most convenient and safest way to pay. But you'll also need some cash, and a backup plan if all systems fail.

These tips should help you avoid hassles and squeeze the most out of your vacation dollars:

—Fees: Minimize, or better yet, avoid foreign-transaction fees by using the right credit and/or debit card for major purchases.

Fees vary, but can add up to 3 percent to the cost of every purchase, including purchases made in the U.S., but processed through a foreign bank.

Most of the bigger banks charge a 3 percent international-transaction fee on Visa and MasterCard purchases, while most credit unions and many smaller banks charge 1 percent.

The best cards for travelers who also want to avoid paying an annual fee are Capital One's zero foreign-transaction-fee credit cards (www.capitalone.com). I use a Capital One basic MasterCard (no reward points, no annual fee) for overseas travel. As a backup, I carry a Visa card issued by my credit union.

There are some new options for credit cards with no foreign-transaction fees, but they all come with high annual fees. American Express, for instance, did away with its 2.7 percent foreign- transaction fee on its Platinum card, but it carries a $450 annual fee. Other choices are cards issued by British Airways, Continental Airlines, United Airlines and Hyatt Hotels.

International-transaction fees also apply to cash withdrawals from automated-teller machines in foreign countries, so check fees with your bank before leaving. Credit unions generally have the lowest ATM fees.

Money cards — debit cards that can be preloaded with cash — generally aren't worth all the extra fees, assuming you already have a debit or ATM cash card tied to a checking or savings account. The Visa Travel Money card sold by AAA, for instance, costs $4.95, carries a $3 international ATM withdrawal charge and a 3 percent transaction fee.

The website, CreditCards.com, has an up-to-date list credit, debit card and ATM fees. See www.creditcards.com/credit-card-news/foreign-exchange-fees-going-up-1267.php

—Phone your bank: Notify your credit/debit card issuer of your travel plans.

An attempt to use a card in a place where you don't normally go will trigger a fraud alert. Your bank may call you (provide a cellphone number since you won't be home) or place a temporary hold on your card. Head off problems by letting your card issuer know you'll be traveling. Ask how you can make a collect call to report a problem. The toll-free numbers printed on the backs of cards won't work for calls made out of the country.

Federal laws (www.ftc.gov/bcp/edu/pubs/consumer/credit/cre04.shtm) limit your liability on fraudulent credit charges to $50. Government protection for ATM or debit-card fraud depends on how quickly you report the loss. In reality, most banks go beyond federal legal requirements and offer zero-liability protection for credit and debit cards losses if reported promptly. Still, to avoid hassles, some travelers set up a special checking or savings account for travel.

—Keep your cards within sight. Make sure waiters or sales clerks process transactions in your presence. "Skimming" is a common scam in some places. A waiter takes your card to a backroom and uses illicit technology to extract your credit-card information and make a copy of your card. A thief can then use the fake card at the same time you are using the real one.

—Chip and pin: American travelers are finding it harder to use their U.S.-issued credit and debit cards in countries where machines in train and subway stations or gas stations accept only "chip and pin" cards with an embedded microchip instead of magnetic stripe. Nearly every country except the U.S. had adopted the technology, which also requires a personal-identification number (PI N).

One solution is to carry extra cash. Another is to use a new prepaid chip and pin Visa debit card, called the Cash Passport, sold by Travelex. Users can preload the card with euros or British pounds, but the convenience comes with a hefty price. Travelex was selling the Cash Passport recently at an exchange rate of $1.65 to one euro (150 euro minimum) vs. the bank rate of $1.44.

—Getting cash: Given the ease of using credit/debit cards and ATMs, there's little need for anyone to stock up on large amounts of foreign currency before leaving the U.S.

For those who want to take along a small amount, major banks, AAA and Travelex sell euros, British pounds and other currencies. Exchange rates will be lower than you'll get using a debit ca rd for withdrawing cash from an ATM once you arrive. Delivery fees add to the cost.

—Have a backup plan: Never rely on any one payment method. Take backup cards, and remember, electronic systems can fail, rendering any type of credit, debit or ATM card temporarily useless. I take along a stash of travelers checks. They've saved me several times when the ATM systems were down, and I needed cash right away.

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