One of the major advertised benefits of applying for and having a credit card is the fact that they are accepted at millions of outlets all round the world. But, are there any major issues you need to be considering when using your credit for foreign purchases? The following are some that you may wish to consider:
Lost, stolen and fraudulent use
Certain credit card issuers have varying policies with respect to any lost, stolen or fraudulent use of you credit card for foreign purchases. It is, therefore, vital that you review your credit card agreement to see how this may affect you with respect to any purchases you make overseas.
Ordinarily, when using your credit card in your home country, your credit card issuer will provide you with free insurance if the item you purchase from a retailer is in any way defective or gets broken. However, when you make a foreign purchase this could change – i.e. you may no longer be entitled to this refund policy. Likewise, any lowest purchase price insurance, where you are basically guaranteed you’ll pay the lowest price in the market for a product, will almost certainly not apply in the case of using your credit card for foreign purchases.
The principal reason why these policies are normally exempt is because these have been negotiated with retailer in your home country – and each countries agreement with the card issuer is different.
Add extras on foreign purchases
If you were not already aware of it, most major credit card issuers charge retailers a fee for items purchased using their cards in the retailers’ stores. This fee can range from between 1 – 5%, depending where in the world the retailer is located. Although it may well be illegal in your home jurisdiction for retailer to pass-on this fee to you as the purchaser, this is not the case throughout the world – and it is not uncommon in some parts of the world to find that a retailer will only accept your credit card purchase if they pass on this fee.
If you are faced with this situation you will have one of two options;
(1) don’t buy the product; or
(2) purchase the product and on your return home write to your card issuer and inform them of the retailer who adopts this policy; it will then be the responsibility of your card issuer to take action against the retailer for this unauthorized action (although you’ll unlikely get a refund).
Most major credit card issuers will charge you a small fee, in percentage terms, for each of your overseas purchases using your credit card.
Do not expect to find the exchange rate used in converting your foreign credit card purchases into your local currency to be the same as the bank rate. In most cases credit card companies have a spread on this.
If you are going overseas on holiday, do take your credit card with you as they are extremely useful to have – but just make sure that you check with your card issuer before you go what their policy is on your using your credit card for foreign purchases.