Credit Cards for European Travel

Credit cards are widely accepted across Europe, which is in some ways good for foreigners, especially US citizens, traveling there but there are some pitfalls of credit card use in Europe that you should know about and there are certain cards that are better for use when traveling in Europe than others. Here is a little information that should help you get the most out of your credit card spending in Europe whether you are there on vacation or are on a business trip.

Credit Card Acceptance in Europe

As mentioned credit card acceptance in Europe is widespread but it you leave the urban cities and center in some countries it does become harder to find places that will accept credit cards as readily. This usually becomes an issue when it comes to paying for lodging in certain areas so you would be wise to check exactly what the payment policies are at anywhere you are considering staying in Europe.

You should be warned that if you are a Discover card holder there are very few places in Europe – even in huge cities like London or Paris – who will have even heard of a Discover credit card let alone accept it. American Express is fairly widely accepted but you will often find yourself facing a minimum purchase restriction of American Express use in Europe because the company tends to charge merchants higher fees than either Visa or MasterCard do so these merchants do have to make accepting American Express ‘worth their while”. Some smaller stores etc may also have similar minimums even for Visa and MasterCard transactions for much the same reasons – i.e. recouping the fees they will be charged.

There is another newer wrinkle to the acceptance of US credit cards in certain European countries that is just beginning to impact the way a foreigner, especially a US traveler, can use their credit card. In Britain, Ireland, Scandinavia, France and Switzerland in an attempt to combat credit card fraud many merchants are adopting what is called a chip and PIN system. This means that a local credit card holder is issued a new card that has a smart chip embedded in it./ When the card is swiped the user still has to enter a pin number, just like a debit card purchase, and then the smart card recognizes the pin and free the credit card for proper authorization.

All of this is rather good for security conscious European credit card holders but can be a problem for US card holders, where such a system really does not exist yet. Some of these chip and pin credit card machines, especially those located at train and subway stations, in fast food restaurants and at petrol (gas) stations just are not set to recognize non chip credit cards, rendering a US travelers credit card useless.

The Foreign Transaction Fee Issue

Although a few more larger banks and lending institutions like Chase and Citi have joined capital one in offering credit cards with no foreign transaction fees attached to them most credit cards do still charge these fees and they can be quite hefty – up to 3% on all purchases and an additional 5% on cash advances in addition to the usual cash advance fee. While on some smaller purchases that may not seem a lot (after all 3% of $1 is only 3 cents) over the course of a vacation those fees can really add up and end up breaking a carefully crafted vacation budget without you ever realizing it until you have been home for a few weeks and receive your credit card statement!

For that reason you may want to consider switching to one of the no foreign transaction fee credit cards if you will be in Europe a lot or have a few months before your vacation anyway. Some of the best worth considering are the Capital One Venture Rewards card, The Citi Thankyou card or the Chase Priority Rewards Visa, all of which do not charge foreign transaction fees.

The Dynamic Currency Conversion Trick

Some rather wily European merchants — capitalizing on the fact that many American travelers are somewhat intimidated by unusual currencies — will cheerfully and seemingly very helpfully charge you for converting their prices to dollars. On the surface this may seem like a lovely idea but you should proceed with extreme caution.

Often the easy to understand dollar price you are given is based off a less than accurate conversion rate that is basically set at whatever the merchant feels like often 3% or 4% off from what the real rate actually is. Add to that the fact that even if you are charged the price of the goods in dollars you will probably still be charged the foreign transaction fee on your card so this kindly little service can end up costing you a lot! Instead take a little time to familiarize yourself with the local currency and the basic conversion rate before you travel so that you can shop like a pro and happily shake off any offers of help and save yourself money in process.

In general even if you have a great credit card that is great for European travel it does not hurt to carry some cash with you (especially if you get caught in one of those chip and pin traps!) You can of course use a foreign ATM but watch those fees as they are likely to be large as well!