Fine print, Living with credit, Protecting yourself

A credit-card-savvy travelers guide to France, Italy

Martin Merzer

You’ve bought the airline tickets, found a few charming hotels (breakfast included), and decided that you’d really rather not drive if you can possibly avoid it, thank you very much.

Now, comes the hard part: Figuring out how to use your U.S. credit and debit cards during your European vacation or business trip. Setting aside most of the technical mumbo jumbo (“Chip-and-PIN card? What’s a chip-and-PIN card?”), here’s a real-time primer for real people.

Full disclosure, the following is based on experiences during late June and early July 2013 in southern France and throughout Italy, but it applies in most regards to virtually all elements of the European Union and to countries in many other parts of the world.

Credit cards

  • The prime directive: Before heading overseas, contact the customer service operation of any and all U.S. credit cards you think you might use during your trip. Two main reasons: 1. The representative will fill you in on current costs and policies. 2. Of equal importance, the representative will add a notation to your account, detailing the dates and countries involved in your trip. This will alert the credit card company’s fraud operation department that you are using your card under unusual — but authorized — circumstances, and that should save you a lot of aggravation during your trip.
  • Acceptance: All major U.S. credit cards — American Express, Visa, MasterCard and, to a growing extent, Discover — enjoy wide acceptance in most parts of Europe and elsewhere around the world. Look for the appropriate credit card logos or just give it a try. Any business displaying a Diners Club logo will accept Discover, and so will many others. If you have a Discover Card and you prefer to use it, it’s worth asking about it pretty much anywhere, as it offers some savings when it comes to fees (as explained below).
  • Fees: Here’s where things get a little complicated. First, a reality check: You’re already spending thousands of dollars on airfare, wine, hotels, wine, food, wine, etc. So, it’s a little nutty to go all obsessive over the difference between a 3 percent transaction fee and a 2.7 percent transaction fee or even a 0 percent transaction fee. Still, we don’t want to be suckered, so here’s the lay of the land.

When you use your U.S. credit card overseas, the credit card company (generally, your bank) will convert euros, British pounds, shekels, whatever, into dollars. The conversion rate will not be great (hey, the bank is there to make a profit), but it generally will not be extortionary. Also, most — but not all — credit card companies will hit you with a “foreign transaction fee,” which is pure profit.

For example, a purchase at a Rome bookstore on July 6, 2013, came in at 18 euros. The official exchange rate that day was 1.2883, meaning that 18 euros officially were worth $23.19. The charge was placed on a Bank of America Visa credit card and came in at $23.25, which does not seem unfair. In addition, BofA imposes a 3 percent foreign transaction fee, which added another 70 cents.

That 3 percent transaction fee is fairly common, but not universal. American Express charges 2.7 percent on most of its cards. Discover, Capital One cards and some Chase and Citi cards forgo all foreign transaction fees, so if you are the thrifty kind, keep that in mind.

  • Quirks: Though European merchants are pleased to accept your plastic, you will note some oddities. Generally speaking, merchants can run the card once — and only once — for each purchase. So, if you’re planning to add a tip to a restaurant bill, you may have to do it before the card is run — or you may be asked to leave the tip in cash. (Euros, that is. We’ll get to that in a moment.) Likewise, if you’re splitting a bill with a companion, tell the waiter ahead of time — and even then, you may not be able to use two credit cards to cover one bill. Every now and then, you may be asked to enter a PIN number to complete your credit card transaction. Chances are, you don’t have a PIN for that credit card so…just pull out another one.

Debit cards — and buying euros

Debit cards can be really useful overseas, particularly if you have one from a major bank and you want to withdraw cash from a foreign ATM.

First of all, when it comes to buying euros or any other foreign currency, you certainly can wait until you are at the airport (U.S. or foreign) to purchase some foreign cash, but you will pay through the nose.

A much cheaper and easier way is to buy foreign currency online from your U.S. bank, assuming you have an account at a major bank. Bank of America, Wells Fargo, BB&T and many other national banks sell foreign currency through their websites, deduct the cost from your checking or savings account and ship it to you within a few days or even overnight. The exchange rate is quite competitive and, generally speaking, there are no transaction fees, though there may be a modest shipping fee.

If you need to buy foreign currency while overseas, your best option — by far — is to use your major bank debit card at a cooperating bank’s ATM. Bank of America, for instance, is part of the Global Alliance network of ATMs and has an arrangement in Italy with Banca Nazionale del Lavoro (BNL). Just walk right up to that bank’s ATM, insert your BofA debit card, press the button that says “English,” enter your regular PIN code, and off you go. Best of all, the exchange rate is within a fraction of the official rate. And there are no fees whatsoever.

But if you use your debit card at the ATM of a foreign bank that is not affiliated with your credit card company, you could get hit with significant fees; be sure to do your research before you leave home.

So, those are some useful tips, and here is one more: Keep those cards in a well-secured money belt, buttoned front pocket or something equally secure. Pickpocketing is something of an art form in Europe and elsewhere around the world.

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  • Steven J Fromm

    Great post Marty. So many of your points are right on the money. Using ATMs is definitely the way to go and exchanges at airports and elsewhere are not. Note, that sometimes credit cards do not work at ATMs and at other places so it is good to have a couple alternative cards set up.

  • hofman

    I will be in Paris and Normandy and other parts of France. I have a credit card with a chip and pin. But not a debit card! They are not available yet.
    Is there an option on your atm’s as to where to withdraw cash from a “credit card” or are the options only checking or saving accounts. Then our Credit cards with chips will not work.
    Wwe do not have access to an atm card with a chip.

  • Louise

    I will be traveling to England and France later this fall. Your earlier post above was dated 2013 regarding use of different credit cards (in particular, a Discover card) and I wondered if you knew how prevalent acceptance of Discover cards is at this time (2015)?