Overseas Credit Tips: The Truth About Chip-and-Pin

If your company does business outside the United States, you likely know what a chip-and-pin credit card is.  Banks in Europe, Japan and Canada all use the technology, which helps prevent credit card fraud by requiring that a user enter a four-digit PIN number, which corresponds to a computer chip embedded in his card, in order for transactions to be approved. 

Although the European Payments Council is intent on restricting use of plain magnetic-stripe credit cards on the continent, chip-and-pin has yet to catch on within the United States.  But should it?  And, perhaps more important, is a chip-and-pin credit card necessary for international business travel?

Chip-and-Pin Credit Cards and American Travelers

As of now, it isn't necessary for American business travelers to get chip-and-pin cards.  Most, if not all, foreign merchants still accept American magnetic-stripe credit cards.  Essentially the only places where "magstripe" cards can’t be used are automated systems like vending machines and automated train station kiosks.

Still, if opening a chip-and pin credit card will provide you with some piece of mind, a few U.S. credit card issuers -- including Chase, Wells Fargo, and U.S. Bank -- now offer chip-enabled cards to select customers.  Wider releases in coming months are planned for these products, which retain magstripe operability. But given that the U.S. is unlikely ever to fully adopt the chip-and-pin system, waiting and perhaps overpaying for these cards might not be a good idea.

All you really need, after all, is a no foreign transaction-fee credit card.

No Foreign Transaction-Fee Credit Cards

Over 90 percent of all credit cards have fees for international use.  Since these fees typically amount to 3 percent of any purchase processed outside the United States, they can certainly pile up and inflate your post-trip credit card statement.  Yet credit cards sto;; provide better exchange rates than exchanging cash at major banks or currency exchange companies, such as Travelex, according to Card Hub’s Currency Exchange Study. 

That means it's important to open a credit card without foreign transaction fees before you even book your flights and hotel room on an overseas trip. I recommend that you stick with either a MasterCard or Visa card because these networks provide the best international coverage by far. 

While there are a variety of credit cards without international fees currently on the market, two of the best are:

• The Chase Sapphire Preferred Card -- Receive $50,000 bonus points after you spend $3,000 in the first three months with this card, which doesn’t have a first-year annual fee.  You can redeem points for $500 in cash or $625 in travel accommodations.

  
  

• The Venture Rewards Card -- Not only does this card come without foreign fees or a first-year annual fee, it also gives you $250 in travel expenses when you spend $1,000 during the first three months your account is open.

You might notice that neither of these products is technically a “business credit card.” That’s fine.  Using a personal credit card for business spending gives you all the protections of the new credit card law and doesn’t increase your personal liability for debt since those so-called business credit cards hold small business owners personally liable for card use, anyway.

Final Tips

Though a credit card should be your primary means of spending during an international business trip because of the favorable exchange rate it provides, you still need access to cash.  Your best bet is to open a low foreign-fee debit card before departing, which you can use to withdraw foreign currency from ATMs at the Visa or MasterCard exchange rate.

Also, make sure to sign checks ony when they're expressed in the local currency.  Merchants abroad may offer to convert purchase totals into U.S. dollars, but they aren’t doing it for customer service.  Instead, they’re doing it in order to apply an unfavorable exchange rate and make a quick profit.

This article comes from the editorial team at Card Hub, an online credit card comparison marketplace.