There are a number of issues to consider when you are trying to determine what is the best credit card for travel. If you click on the header graphic of this blog post you will get a graphic comparing 15 popular credit card options.
The Wrong Credit Card
We had arrived late into Charles de Gaulle airport in Paris, just after 9 pm at night. Our intention was to grab the metro into town where we had a hotel room waiting for us. We confidently approached the automated machines to buy a ticket to the city but we were stopped in our tracks. The machine would take either:
- euro coins
- a credit card with a smart chip
We did not have enough coins to buy a ticket. Because we had just arrived in the country, I don’t think we had any coins at all. Our U.S. credit card from CitiBank does not have a chip in it. This is a system also known as the smart card, java card or chip and pin system supported by European banks but not supported by U.S. banks… at least not until recently. We had the wrong credit card. We ended up having to pay for a more expensive cab ride into the city.
Credit Card Rewards
We have a credit card that gives us frequent flier miles on American Airlines. Is this worthwhile? Both my wife and I flew to Europe last December on miles we had accumulated. In my opinion, you should always use a credit card that earns you some sort of rewards. Frequent Flier miles are a popular choice for travelers although hotel points are also common. Your choice of card may be influenced by the hotel merchant services of the available hotels in the area or by which airlines service your local airport provides but be aware that increasingly credit card companies are starting to offer cards where the miles are not tied to a specific airline.
Historically frequent flier credit cards have typically charged an annual fee. My American Airlines CitiBank costs $40 a year. But as you can see from the 15 cards profiles in the infographic, some cards like the Capital One, Discover and Chase now have no fees.
Discover and American Express
Not all cards are created equal. I have never had trouble getting someone to accept my Visa or MasterCard in foreign countries but I have certainly seen places that did not accept American Express. Discover is probably the least widely accepted card in my experience.
In my opinion, if you care about what the interest rate for your credit card is then you should cut up your cards immediately. The credit card business is kept afloat by people who are sinking in credit card debt. If you are carrying credit card debt then the right credit card for you is no card or a debit card. I don’t care what interest rate the bank wants to charge me because I plan on paying off the balance every single month. If you pay interest then thank you for supporting my credit card… but please stop.
Some credit cards offer extras like travel insurance automatically when you purchase your ticket or reserve a rental car with them. That is a great bonus for travelers and worth understanding before you decide on a credit card.
Foreign Transaction Fees
When you use a credit card overseas your bank may tack on additional fees. These fees are for the convenience of converting currencies and for the cost the bank will have moving the money across borders. But not all companies charge transaction fees. Both Discover and Capital One have done away with transaction fees. That can save you 2-3% of the cost of your purchases.
Smart Card / Chip and Pin Credit Card
As to the issue I ran into in the Paris airport, I have been on a quest to find a U.S. bank that offers a card that I would have been able to use.
I just got off the phone with CitiBank and Capital One and they did not even have any idea what I was talking about when I asked if they supported credit cards with smart chips or “chip and pin” credit cards. Most U.S. credit card companies say you won’t have any trouble using your credit card in Europe and that is true if you are handing the card to a person. If you are putting the card in a machine then in my experience you have about 50% chance that the machine will require the chip and pin system. The other half of the time, if your card only has a magnetic strip you might as well try your library card is the machine for all the good it will do you.
After putting me on hold twice to talk to other departments CitiBank offered that they did not have credit cards with chips but they could offer me a “payment pack device”. I did not get into the details of what that was when they verified that it was not a credit card with a chip. At that point, they might as well have been suggesting I try and pay for a metro ticket with livestock. If it won’t fit in the credit card slot and get me a ticket then it is of no use to me.
Chase has just announced that chip and pin credit cards will soon be available in Canada but a call to them found no information about plans to launch such cards in the U.S.
The chip and pin cards should not be confused with the second type of chip that Chase is experimenting with. They are now offering the “blink” cards which have RFID chips that will transmit your information so that you don’t need to swipe the card. This is a different system.
The most interesting vendor for now for U.S. travelers seems to be Capital One for not having credit card transaction fees, but so far… if you are trying to buy a train ticket in Charles de Gaulle… you might want to bring some sheep because your credit card won’t help you.