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Seasoned travelers know that a big advantage to using hotel reward credit cards while traveling overseas is that credit card purchases are exchanged at the interbank exchange rate, usually the best rate you can get for currency exchange. Thus, it's always best to use hotel reward credit cards for large purchases while traveling, such as for airline tickets, hotel bills and car rentals.
Unfortunately, a recent trend of adding fees to any transactions made in foreign currency might make your credit card purchases abroad less of a bargain. While you'll still get the favorable exchange rate, some hotel reward credit cards issuers are adding fees on transactions made in foreign currencies. This fee comes in addition to the standard 1% fee that Visa or MasterCard will assess to cover the cost of a currency exchange.
The biggest fee charged among hotel reward credit cards issuers is about 4%, imposed by Providian. But this fee only applies to accounts with higher limits, or, about half of all accounts. Next come Citibank, Chase, Diners Club, First USA, and American Express, which have about a 2% surcharge across the board, on all purchases made in foreign currency.
So, if you are traveling abroad with hotel reward credit cards, call the issuer and ask about any additional fees. Be sure to do this before each trip, because these policies may change without notice. Another option available to you is MasterCard and Visa debit cards. While they look and can be used like the regular charge cards, they actually debit your checking account similar to your ATM card.
You can also use hotel reward credit cards to get cash advances in various countries around the world, at the best interbank exchange rate. But, bear in mind that all cash advances will be subject to the various finance charges your credit card company imposes. Also, if you're not home by the time the bills come in or don't have someone paying them, you'll end up with hefty finance charges on these advances.
Before you rely solely on hotel reward credit cards for all of your travel needs, you need to bear in mind that some hotels and car rental companies may put holds on your hotel reward credit cards for the amount of your total expected bill. This can use up your credit before you've actually incurred these charges. All merchants are supposed to inform you if they do put a hold or "deposit" on your card. If they do, make sure that the hold has been removed when you pay your bill in full.
Another potential problem with using hotel reward credit cards while abroad is that you don't have as much protection, as you do in the States, when problems over inaccurate charges arise. There are instances of travelers being charged twice for the same item or for items they never purchased, and credit card companies have been unwilling or unable to intercede on their behalf. Always watch merchants closely while imprinting your card and tear up your carbon receipts at the end of the transaction. This is because, some merchants will hold your hotel reward credit cards slips in the hope that the dollar will go down and they will get a better exchange rate. Of course, if the dollar rises, you may get a better exchange rate if the processing is delayed.
You are also not protected from credit card purchases that are damaged in overseas shipping. And, every time you use your hotel reward credit cards to make a purchase, you put yourself at risk. An employee can store your name, credit card number, expiration date, type of card, and issuer of the card, and then sell it on the streets. The buyers can then encode your credit card information on empty or canceled hotel reward credit cards, and use it. And, you won't even be aware of it until you receive the bill.
So, if you see charges on your hotel reward credit cards, which you didn't make, call your creditor, and ask them to dispute the charges. You will then receive an affidavit of forgery by mail. Sign it if everything is accurate, and send it back. However, you will lose $50 of the amount that you claim was unauthorized.
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