Foreign credit card abroad – what you need to know before getting a credit card overseas

Do you do a lot of world travel for work or business? Maybe you have a holiday home and spend a few months of the year overseas. If this is your situation then have you ever considered getting a credit card abroad?

One of the main problems people have when they use their domestic credit card overseas is that there is normally a rather large charge for carrying out transactions or withdrawals in a different country.

If you are spending longer periods of time in a foreign country and are using your credit card regularly then you will probably find yourself with some horribly big fees to pay when you return home.

Getting a Credit Card Abroad

So other than saving money on overseas transactions what are the benefits or pitfalls of getting a credit card abroad?

The first thing that you will want to do to find out if it is worthwhile is to work out exactly how long you do spend in foreign countries each year. If you are only ever out of Australia for a few weeks family holiday then you could probably get away with using cash or travellers cheques whilst abroad.

If however you are away for more than a couple of months then you are more likely to benefit from a foreign credit card. There are some things that you do need to consider when deciding whether to apply for a credit card based overseas:

How do you get paid - If you are abroad and get your wages paid directly into the bank account that is linked to your foreign credit card, whatever the exchange rate is on the day you get paid will be the rate that your money is converted at.

In other words if it happens to be on a day where rates are against you then you will lose money. You would be better getting your wages paid into your Aussie bank account and then transferring the money when the rates pick up.

How much is it costing you? – Just the same as domestically credit card companies charge an annual fee for their product so do card companies abroad. If you are only spending a couple of months abroad you need to see whether the fee you will pay make the card worth your while.

You should certainly be looking for a credit card that has a very low annual fee to give yourself a better deal.

Application process – Getting a credit card abroad as a foreign national can be tricky. Generally you will not have a credit history within that country and that will instantly go against you.

In some cases you will have to open several accounts with a bank, and then only after a few months would they then consider you for a credit facility. Some lenders will just not consider someone who is not a national of the country.

To make it worth the time and investment to get a credit card abroad you need to make sure you are going to save in fees, more than you spend on foreign credit card costs.