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Credit Cards:

The acceptance of credit cards varies by country. Rarely can you buy everything by credit card, but in most of the developed world you will be able to buy most of your major purchases (hotels, air travel, car rentals, expensive purchases and expensive restaurant meals) on credit card. In less developed locations your credit card may be totally useless. In all cases there will be some expenses that cannot go on a credit card so you cannot rely on a credit card exclusively.

The best-accepted cards worldwide are VISA (http://www.visa.com/) and MasterCard (http://www.mastercard.com/). American Express (http://home.americanexpress.com) comes in a good third, but acceptance for any other card (Diners' Club (http://www.dinersclub.com/), Discover (http://www.discovercard.com/), JCB (http://www.jcbusa.com/), etc) is spotty at best.

The biggest advantage of a credit card is convenience. You do not need to know exactly how much money to bring with you. You also don't need to deal with the inconvenience of money exchange.

The next biggest advantage is the low risk. In most countries you are not responsible for any expenses made on your credit card that occur after you report it lost or stolen. Credit card companies will also protect you if you are charged more than you agreed to pay, or if you pay for something and never receive it. However, be careful where you use your card in some countries, as your card can be cloned (duplicated) without your knowledge and then used for fraud without being physically stolen.

Many credit cards also include some forms of insurance protection for all expenses made with the card. This can include cancellation insurance for flights (usually only in the case of serious sickness), theft or loss insurance for goods, Collision insurance for rental cars and even travel health insurance when you are travelling. You should look over you credit cards insurance carefully before you start to travel to see what it provides. It may even be worth getting a travel credit card, if you don't have one, just for these coverages. Also note that you can often tie in a credit card to a frequent flyer program, so you get more miles and free trips faster.

The biggest disadvantage is cost. At one time credit card companies used to apply the exchange rate they got to your exchanges. However, most credit card companies now incorporate a exchange fee into the exchange rate that they offer. This is generally in the 2-3% range. You can call your credit card company and ask what the fee is as well as asking what the current exchange rate is for the currency that you would like to find out about. One thing that should be noted is that the exchange rate is applied at the date the expense was posted to the account, not the date the charge was made. Therefore if you are dealing with a fluctuating currency it is impossible to know exactly what exchange rate will be applied for an expense until a few days after you make the expense. Hotels in some countries (notably) will perform the currency exchange at the time of the transaction. This removes the uncertainty about what you will pay, but the downside is that the exchange rate fee (about 2-3%) that is incorporated into the transaction may well mean that this is not in your favor.

If you have multiple credit cards it is often a good idea to only carry around the one you will usually be using and keep others in a safe location. Then if your main one gets lost or stolen you will not be left without a credit card, or have to go through the hassle of replacing a credit card in a foreign country.

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