International travel and banking: Part 1

Today’s post at Get Rich Slowly has reminded me to record some research I’ve been doing into banking while traveling outside the U.S. For the past several months I’ve been flirting with the idea of a trip to Spain. So far this has resulted in lots of logistics planning, but no actual bookings. Nonetheless, I’ve learned some important things that will help when I do finally get there.

While in Spain, I will be conducting purchases with both cash and credit card. I may use a debit card, too, but since I would not get the same purchase protection with a debit card as I will with a credit card, then I’ll likely just use my credit card to pay for lodgings and transit whenever possible.

I’ll also need cash for things like incidental purchases (water, small snacks, etc.) and potentially for bigger purchases such as transportation tickets at unattended stations. And here’s where the first important lesson begins.

Unfortunately for U.S. travelers, the credit and debit cards issued by U.S. banks do not meet the security standards used in most European countries. This means that if I need to buy a train/bus/metro ticket at an unattended station, I’ll most likely need cash.

In Europe the security standard for debit and credit card purchases is referred to as chip and PIN. A smartchip is embedded in the card and for a transaction to be successful the purchaser must key in the correct PIN associated with that smartchip. This standard is supposed to be much more secure than the one used in the U.S. that involves swiping the card and simply checking a signature and/or ID. The U.S. just hasn’t adopted this standard yet, which adds a layer of complexity to travel planning.

While there usually isn’t a problem making purchases with U.S.-issued credit cards at hotels, restaurants, and shops, travelers have reported problems purchasing tickets from machines with their cards. Cash will work in the machines, though, so I’ll try to plan ahead to have the right amount of cash on hand or to purchase tickets from agents only.

Recently a chip and PIN pre-paid foreign currency card has become available in the U.S. I’ve looked at this card offered by Travelex and while it does have some benefits, I’m not sure yet if I’ll give it a try. Putting my vacation funds on a pre-paid card would certainly help me stay within a set budget, and since it’s a chip and PIN card, I should be able to use the card at metro ticket machines and other unattended vending stations. Since I work not far from a Travelex office, I may make time to stop in one day and ask about what fees may be associated with using their Cash Passport before I commit. In just looking at the Terms and Conditions online, the fact that it will cost €1.75 per ATM withdrawal alone makes it pretty unpalatable to me.

Increasingly the chip and PIN standard is becoming the norm. Canadian banking institutions are now issuing these cards and I’ve even gone so far as to research whether it would be worthwhile to open a Canadian bank account so I could get one. So far, it looks like I’ll just have to get used to using currency when I run into situations where my credit or debit card won’t work. And that will lead me right into the next topic in Part 2: minimizing transaction fees. More to come!

3 thoughts on “International travel and banking: Part 1

  1. When I was in Morocco, a couple of the people in my travel group had those pre-loaded cards where they were supposed to be able to put them into the Cash Station and get their money . . . um . . . not so much. They all had trouble with them. I, on the other had, with my plain old Visa debit (which is my cash station card) had no trouble at all. I didn’t use it for purchases (used a regular Visa for those), just cash. Oh – and Visa is often a better choice than MasterCard in many countries. Not sure why.


    • Thanks for the tip, A! I forgot you were out of the country not that long ago and would have some fresh perspective on this. In my next post I’ll write about my research into fees for using things like ATMs. Knowing your banking habits like I do, I’ll bet you didn’t have any problems with fees, while many of your travel group members would have.


  2. Pingback: International travel and banking: Part 2 « a windycitygal's Weblog

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