O’Connor: Little-known vacation perks in (credit) cards

Brian J. O'Connor
Detroit News Finance Editor

All packed for your vacation? Let’s review the checklist: You’ve got your swimsuit, a book for the beach, boarding pass, adapters for overseas electrical outlets and, of course, your TSA-approved baggie with 3-ounce bottles of tequila ... I mean, “mouthwash,” right?

There’s one more thing to check: your credit cards.

While it’s a bad idea to finance a vacation on credit cards, the little-known perks of plastic can make them an invaluable traveling companion, from replacing lost luggage to getting you sprung from a foreign jail after imbibing too much local “mouthwash.”

Even better is the fact that one particularly bogus credit card trick is vanishing: The foreign transaction fee, which could add as much as 3 percent to purchases made in foreign currencies, notes Dan Ray, editor-in-chief of CreditCards.com. The site lists more than 50 cards that don’t charge anything when you rack up a charge in euros, pounds or even Malaysian Ringgits.

“The public caught on to them,” Ray says. “There is no excuse for anyone to be paying a foreign transaction fee. You should save that money and buy yourself an extra souvenir.”

Or a good bottle of ‘mouthwash’

Of course, the financial-industrial complex couldn’t let one scam disappear without creating another wallet-plucker, so meet the “dynamic currency conversion fee.” In this case, an overseas merchant offers to convert your purchase into the local currency on the spot, so you’ll see how much it costs in dollars. But the exchange rate is going to be much higher than what your card issuer normally applies.

“You’ll know what you’re paying, but guess what?” says Ray. “You’re paying more than you need to.”

Well, fish gotta swim, hucksters gotta huck.

As long as you skip the dynamic conversion fee, however, there are many other cool card benefits. A big one is rental-car damage coverage, which allows you to decline the hard sell at the counter for the collision damage waiver, or CDW, which can cost about $20 a day. Your own auto insurance will cover any car you drive, minus your deductible and any uncovered costs, including a rental. A CDW covers those other expenses, but so do many credit cards — for free.

Before you travel, check with your insurance agent to see what kind of coverage your policy applies to rentals. Then check your cards to see what costs they’ll handle. That’s usually secondary coverage, or whatever costs are left after the insurance payout, such as your deductible. Some cards do offer primary coverage, which is best. Remember that to get the benefit, you have to reserve the car with the card.

There’s more in the cards

Other credit card travel benefits include lost or delayed luggage coverage, which pays for replacing clothes, toiletries and other necessities, as well as accident insurance and trip interruption insurance. Some cards also include assistance with medical issues overseas, theft of items from your hotel, roadside assistance, legal assistance or even covering the costs of evacuating in an emergency.

Your best bet is to check your card issuer’s website, then flip your card over and call the 800 number to ask exactly what kind of coverage and benefits you can expect. As in all things financial, limits and exceptions abound.

The one card you don’t want to use on your vacation is your bank debit card, which doesn’t offer the same benefits and gives much less financial protection if the account is breached. If you really want to avoid the temptation that a trip will increase your card balance, go old school and get traveler’s checks. Yes, traveler’s checks still exist but, because nearly everyone leaves home without them, you may have to stick to cashing them at hotels and banks.

One more thing: Before you go, call the issuer of any cards you intend to use and let them know you’ll be traveling abroad, so that your card isn’t shut down for suspected fraud. Otherwise, you could end up broke in Borneo or penniless in Pago Pago.


(313) 222-2145

Twitter: @BrianOCTweet

Brian O’Connor is author of “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”