Differences in international monetary standards make spending money abroad often confusing and even downright difficult. When it comes to traveling overseas, consumers must not only determine the acceptable methods of payment for the countries they plan to visit, but also figure out a way to avoid foreign transaction fees and get the best exchange rates. On the other hand, international businesses—tasked with tackling the logistics of accepting international credit cards—often need to establish international merchant accounts and join international credit card processing networks. Given the obvious importance of international spending in our global society, we have constructed this International Credit Guide to help you learn about and avoid the pitfalls of international credit card use.

• What’s an international credit card?
• What fees are associated with an international credit card?
• Which international credit card is the most highly recommended?
• What are international merchant accounts?
• How can I accept international credit cards?
• How does international credit card processing work?
• How do magnetic stripe credit cards differ from chip-and-pin credit cards?
• Where can I get an international prepaid credit card?
• What are international debit cards?
• Should I get an International Credit Card or an International Debit Card?
• Are we close to global credit card interoperability?

What’s an international credit card?

A lot is different when you travel abroad. The food, the language, the fashion and the culture are all somewhat unfamiliar, as is – of course – the money. In order to buy anything in a foreign country you must have access to the native currency and this means currency exchange. However, exchange rates and the logistics of currency conversion can be both confusing and rather costly. Since foreign travel is difficult and expensive enough as it is, we at Card Hub decided to answer the most prevalent currency exchange questions in order to provide you with everything you need to know before your next trip abroad.

• What is Currency Exchange?
• How can I exchange currency?
• What is the cheapest way to convert currency?
• What are No International Fee Credit Cards?
• Will my credit card work outside the U.S.?
• What are the most widely accepted international credit cards?
• When should I convert my currency?
• How much currency should I convert?
• What causes currency exchange rates to fluctuate?
• What is Dynamic Currency Conversion?

What is Currency Exchange?

When shopping overseas, a merchant may ask you if you would like to convert your credit card transaction from the local currency into U.S. dollars. This is called Dynamic Currency Conversion (DCC), and while it may sound like an enticing offer, this conversion is very expensive for the cardholder and should be avoided.

Generally, when an overseas merchant makes this offer, they will use a conversion rate that is far higher than the actual going rate, as high as 7 percent, and pocket the difference as a fee. They get away with it because many customers are not checking the math at point of sale to make sure the conversion was accurate.

The banks are all bleeding money due to record high credit card default rates.  Compounding their problems is the Credit CARD Act of 2009.  Once the bill takes effect in February, there will be restrictions on interest rate hikes for all credit card issuers, so between now and then, the banks are doing all that they can to shore up their books and this means ratcheting up interest rates.  It’s not fair to consumers, but there will be some correction to these practices once the law becomes active.  Unfortunately, there’s not much you can do.  If you have good credit, you can shop around for a card that has a lower interest rate, transfer or payoff your balance and then close your old account. Other than that your only option is to accept the new interest rate, even if it is only for the period of time it takes you to payoff and close out your account.