Going overseas? Follow these credit card tips

We've warned you in the past about the frustrations that can come of using a debit card for traveling expenses: A vendor such as a hotel or rental car company can put a hold on a potentially large amount of money, effectively freezing it until as long as a few days after you've checked out or returned the vehicle. There are a couple of important things to keep in mind when you're using a credit card for your travels, too, if those travels take you beyond U.S. borders.

Odysseas Papadimitriou, founder and CEO of the site CardHub.com, says it's important to make sure you have - or get - a card that doesn't charge a foreign transaction fee. Many cards, maybe even the ones you use every day, will tack on up to 3% of the purchase price if the transaction is processed in local currency. While this might not sound like a huge amount, if you're taking a long trip, that means every swipe for a meal, a train ticket or a hotel stay will end up costing you more than it should.

If you're thinking this doesn't apply to you because you don't travel outside the U.S., that's not necessarily true. If you buy something online from a seller in another country, you could get slapped with a foreign transaction fee, as well.

Papadimitriou also warns against another practice. If you're shopping overseas, a merchant may ask if you'd like your purchase to be processed as U.S. dollars rather than the local currency. Not only will this not get you out of the foreign transaction fee (since the transaction is still being processed in another country), the merchant will tack on as much as a 7% fee to convert your purchase. This is a practice called "dynamic currency conversion." Stick to the local currency and use your no-transaction-fee card for the best deal, since credit cards yield more favorable exchange rates than exchanging cash.

Finally, Papadimitriou advises, "Carry your passport with you because you will find that merchants ask for your ID more often overseas than in the U.S." After all, you don't want to be stranded at a foreign cash register with no way to pay.
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