by Nancy Bestor
Customers often ask our opinion about the best way to get foreign currency when traveling abroad. Since the traveler’s check has become a dinosaur, the most economical way to pay for purchases abroad is to either obtain currency from an ATM machine, or use a credit card that does not charge a transaction fee (such as a Capitol One card). ATM machines do of course charge a per transaction fee, and sometimes a percentage fee as well, so we try and get as much cash out of one ATM transaction as we are allowed (usually between $300-500 per day).
However, our preferred method of spending is our Capitol One card. With Capitol One we don’t pay anything extra in exchange or transaction fees. But we have run into a few problems using this card in other countries. The reason? US bank issued credit cards use magnetic stripe technology, while credit cards in Europe use the “smart card” or chip and PIN technology. European credit card terminals can still accept magnetic stripe cards, but they must be processed in a different way, and many European businesses and their employees do not know how to process them.
When we ran into this problem, we asked the business to run the card again, and in most cases they were able to figure out how to accept our card. US Banks are beginning to catch up to banks in Europe, but chip and PIN credit cards are still in the trial phase, issued by some banks to frequent international travelers as part of a pilot program. The best advice I can give to customers is to have an alternative method of payment available as a backup, whether it is another credit card, cash, or even a quick dash to a nearby ATM machine. For more information on this issue read this story in the New York Times.