For more info:
www.visa.com
www.mastercard.com
www.americanexpress.com

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Credit Cards & Cash Advances

Using credit cards—Visa, MasterCard, American Express, and others—when traveling in Italy

Europe takes plastic—in fact, credit cards are usually the easiest and most-cost effective method of paying for anything while traveling
Italy takes plastic—in fact, credit cards are usually the easiest and most-cost effective method of paying for anything while traveling. Yes, Italy takes plastic. Every merchant from the museum gift shops and train ticket machines right on down to the majority (though not all) of the mom-and-pop shops, hotels, B&Bs, and trattorias.

Visa (www.visa.com) and MasterCard (www.mastercard.com) are the most widely accepted credit cards abroad these days. In other words, contrary to the old commercials, you can, indeed, leave home without American Express (www.americanexpress.com) and never notice the difference.

This is partly because Visa and MasterCard have partnered with major European cards, and partly because AMEX charges higher fees to the merchants and is slower in paying them, so many small family businesses have stopped accepting it, arguing—with a good point—that nowadays "Everybody has Visa!"

The chip cards cometh
The U.S. is woefully behind the rest of the world when it comes to implementing advanced technology in everyday life.

Japanese and European cell phones (and networks) are better, many cities now use radio cards for public transport that you just wave at the turnstile while waltzing though (in Hong Kong, you can use the same card to buy snacks at 7-11), and many countries are now using more advanced credit cards called "chip and PIN" with computer chips built in (rather than just the magnetic stripe).

Why do I risk the wrath of my more zealously patriotic fellow citizens by pointing all this out? Because, in a very few (but, ominously, increasing) number of cases, you will find merchants and services in Europe that only accept the chip-and-PIN smartcards—most disruptively, this includes many gas stations and ticketing machines for trains and public transport. To them, your old-school Visa with the magnetic strip is just a worthless slab of plastic. (This, in case you recall, was the reason the Paris city bike program didn't work for Americans at first.)

Best I can figure, the chipcard-only phenomenon started in Scandinavia, but it's spreading. In summer, 2009 I encountered it in Italy as well. (Luckily, the shop still had its old swiping machine, which they kindly dug out of a drawer, dusted off, plugged in, and used to run my card. I felt like a bumpkin who had tried to trade them a chicken for their services.)

Solution: Make sure you know the PIN for your credit card (or contact the issuer and get one), as this can help in some cases. Also, beg the merchant to push "No PIN" or "Signature" on their machine so it will spit out a traditional reciept for you to sign.

Also, carry cash.

For more: www.creditcards.com

Diner's Club (www.dinersclub.com) is accepted in many places (though usually, as expected, only the pricier joints). So is Japan's JCB (which I throw in there in case any Japanese people happen to be reading this).

Discover or any other card will only elicit a raised eyebrow of curiosity and shake of the head from your waiter or merchant—to say nothing of your Exxon card.

Just leave these and any other card at home—along with your library card, gym membership, cheese-of-the-month club card, and any other wallet item that will be useless deadweight in Italy.

Playing the rate game

While paying with credit cards does get you a better exchange rate than with cash, know that Visa itself has now started imposing a 1% "commission" for foreign purchases and cash advances.

Many Visa-issuing banks—recognizing yet another good way to fleece their own customers—quickly followed suit by tacking on additional 1%, 2%, or even 3% "commissions" of their own.

They will tell you this is a banking fee for performing the currency exchange.

They are lying.

This is because:

(a) The Visa corporation has already performed the currency exchange before the transaction ever gets to your issuing bank (which receives the transaction in dollars), and

(b) It's all done electronically, so there's really nothing to "exchange" in the first place.

These extra few percentage points your bank is charging is 100% profit for them, pure and simple, and they are stealing it from you.

When compared to exchanging traveler's checks or cash, within the space of a few years credit cards have gone from being the better deal to being either on par with—or actually costing you more—the other methods, especially when it comes to cash advances:

Cash advances: Avoid if possible

Many credit cards are now charging exorbitant "transaction fees" of $5 or more (plus a laughably inflated APR, which starts accruing immediately) for each cash advance through a credit card, so read the fine print carefully when choosing which Visa card to use on the road.

Use cash advances only in emergencies (and see below for a trick). These credit card folks are counting on your complacency to keep milking you for money. Don't give them the satisfaction.

Call your credit card isuing banks before you leave

Where to get a low-fee credit card
Your best bet for a friendly, low-fee credit card is a very small local bank or credit union.

Of the big national credit card issuers, here are a few I know of that charge from nothing to 1% (at least last time I checked):
• Captial One (capitalone.com), 0%
• HSBC (hsbc.com), 1%
• Providian (providian.com), 1%

You can get much more on this (and other finincial issues) at the excellent financial planning site BankRate.com (bankrate.com) and at this wiki on FlyerGuide.com.

Always let your card's issuing bank know that you're taking a trip—especially an international one. Just call them up before you go (the number's on the back of the card), and give them your travel dates and countries.

Why bother? Because most companies have a computerized watchdog that monitors your card's use, looking for radical changes in the frequency or location of charges. When it finds them, it freezes the account.

Ideally, this system alerts them if someone steals your card and goes on a shopping spree, but it has the unfortunate side effect of leaving travelers in the lurch, because on a typical vacation your card is acting a lot like it was stolen (since you're suddenly charging more than usual, and making those charges from strange places far from home).

For what to do if someone really does steal your credit cards, see the "Losing Things" section.

Avoiding cash advance charges: A nifty trick

Whenever you get a cash advance on a credit card, the bank starts charging you interest immediately, not after the end of the billing cycle's month as they do with purchases.

That means if you take out $200 on the first day of a two-week trip, for two weeks the credit card issuer will be charging you the highest possible interest rate (not that introductory 9.67%, but the industry ceiling of 19% or more), compounded daily, and will continue to do so until you pay your entire credit card bill all the way down. They often tack on a one-time "service fee" as well.

You may be able to avoid this, however, by being a bit sneaky: they can only charge you interest if you're carrying a balance. The trick is to make sure you never carry a balance on the card by overpaying your bill (by however much you expect to withdraw in cash advances, plus purchases) the month before you leave. Yes, this is silly, but it usually works.

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Credit Cards & Cash Advances

Playing the rate game

Cash advances: Avoid if possible

Call your credit card isuing banks before you leave

Avoiding cash advance charges: A nifty trick

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