Editorial Policy

Vacation checklist: How to protect your finances while you are traveling

Marcia Frellick

June 25, 2012

Before you zip up your suitcase and gleefully enter your “out of office” auto email reply, make sure your vacation plans include protecting your finances while you’re gone.

Credit cards can be both an asset and liability on vacation, so it’s good to review some of the rules and precautions. Here are some tips on handling credit cards and other financial tools as vacation season goes into high gear:

  • Take advantage of your credit card’s protections and benefits. Use your credit card when you pay for flights, hotels and rental cars. Some cards offer auto rental car collision insurance, and some also have trip cancellation and lost luggage insurance. Check your card agreement to see what what’s covered. With a good rewards program, you’ll also build points toward your next trip.
  • Carry some cash. You’ll need it if you’re ever in a place where cards aren’t accepted. For some destinations, many merchants do not accept cards.
  • Carry only essential cards. If you have a second card, take it for backup and lock it in the hotel safe. Leave the rest of your cards at home – just be sure to pack an ATM/debit card for quick cash.
  • Use banking services to pay bills if you’re taking a long trip. Many banks will let you automate your payments so that, on a certain day each month, funds will come out of your account to pay everything from credit card bills to utilities. If you have access to the Internet, you can also use online banking to make payments while you’re gone.

If you’re leaving the country, some additional advice may help:

  • Let your bank in on your travels. Tell your bank and credit card company where you’re going and for how long. That way, if charges start showing up from a tiki bar in Taipei, you won’t raise suspicions and run the risk of having your card frozen.
  • Get familiar with foreign transaction fees. This is a fee charged to your credit card for making purchases overseas, and is generally between 2 percent and 3 percent of the purchase amount. Some cards don’t charge them. Some charge up to 3 percent, which means $1,000 in purchases can result in $30 in fees. Check with your issuer to find out if your card charges these fees. If so, and if you have time to spare before your trip, you may want to apply for a card that doesn’t charge them, such as a Capital One card.
  •  Know that your card’s magnetic stripe may not work in some places. Many countries outside the U.S. have largely moved to chip-and-PIN (also called EMV) cards — cards you scan (rather than swipe) and then punch in a personal identification number. Though some of these readers can still read magnetic stripes, travelers may not be able to use their credit cards at places like train stations, tollbooths, gas stations and parking meters in other countries.

If, despite your efforts, one of your cards is lost or stolen, don’t let it ruin your trip — just report it immediately. Your liability with a lost or stolen credit card is a maximum $50 by federal law. ATM and debit cards are covered under the Electronic Funds Transfer Act, and your liability for fraudulent charges is limited to $50 if you report the loss within two business days. Don’t procrastinate — after two days you can be liable for up to $500.