Using American Credit Cards In Europe

Huffington Post has an article about using American credit cards in Europe. Written by Tom Meyers, founder and editor of Eurocheapo.com, Using American Credit Cards In Europe? Get Ready For Rejection argues should expect to have trouble buying things through machines.

From Singh Around The World

Meyer describes a situation that many American tourists experience:

"Here's a typical situation: You're ready to buy your RER ticket to get in from Charles de Gaulle airport in Paris. You line up behind your fellow travelers at the boxy ticket machines and watch them effortlessly touch-screen their way through their purchases. You step up, follow the onscreen instructions in English, insert your credit card and...

"CARTE NON LUE"

Hmmm. It didn't read the card? The machine spits the card back out (in slowmo). You reach for another card and...

"CARTE NON LUE"

(pause for suspense, and then, in red letters)

"TRANSACTION ANNULÉ"

No matter how many times you try, it won't work. Hopefully you have cash (and coins, too, if your machine doesn't accept bills). If not, you'll probably be spending the next hour waiting in a line in the ticket office behind travelers hearing about all of their TGV options.

Ironically, your card will work in the ticket office. So why the rejection?"

The reason for the "rejection" is that Europe switched to a Chip & Pin system. A Chip & Pin card has a small computer chip in the card and requires a pin to complete the purchase. Why can you use your magnetic card in stores, but not at machines? The reason can be simplified that the "PIN" becomes the verification in absence of the signature.

Meyers suggestion is less than be desirable:

"My advice is to be prepared for your card to be declined anytime you try to pay at a kiosk or machine. Bring cash. Have coins ready. And be prepared to wait." 

Really? Use cash and coins? That's not really a solution.

Here's my solution, get a Chip and Pin credit card. And don't believe what Meyer's says:

"While there are a few American credit cards that now offer the chip-and-PIN technology, most seem to be for high rolling corporate business travelers, and the banks charge dearly for it."

American chip and pin credit cards are becoming more and more available for all and not just rich corporate business travelers. However, you need to do some research before getting chip and pin card. At the moment, there are two types of chip credit cards floating around: 1) Chip and Pin  and 2) Chip and Signature. Credit card companies are advertising the cards as one in the same.

The two are not the same. Chip and Signature credit cards have been reported to not to work in machines in Europe. The reason for them not working is the card has no pin to authorize the transaction. Therefore, when you must ask if the card is a "chip and pin" card.

Two years ago, the hottest credit card was the Chase British Airways Visa. The card was one of the first offered widely to Americans with a chip offered to it.

However, as Million Miles Secret writes the card was actually a Chip and Signature card. Not a Chip and Pin card.

What does this mean for Americans?

First, call your credit card company to see if any of your current credit cards can be upgrade to one with Chip and Pin technology. Many of the major credit card companies offer this service upon request.

Next, if applying for a credit advertising "Pin" technology, ask questions about which type of "pin" technology the card offers: chip & signature or chip & pin.

Finally, do research online about which credit card is best for traveling abroad. For instance, when we went to Canada, Cash Back Boy tried to use his Discover Card only to be turned down at every restaurant, bar, and attraction. A quick search online would have turned up that Discover's foot print in Canada is very small. He should have brought a different card.

A little bit of preparation before your trip to Europe, can allow you to catch that train!

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Points for the Unexpected

Its funny when you plan to write a post and another blogger beats you to the punch. Most of the time, it has something to do with an announcement  a new offer, but every once and a while its about a random subject. I had been planning for a while about writing a post about "Points for Emergencies." Yesterday, Mommy Points wrote an article about how points can be valuable in emergency situations. She used her emergency points to send a family member to help a child out after a devastating fire.

In the middle of last year, I had a light bulb go off in my head. My maternal grandmother was in the hospital (for the xyz time) and my family though that it might be close to the end. I live 6 hours away from Connecticut and have multiple ways of getting home quick, Amtrak, Southwest, driving, buses, rental cars etc. While they might not quick, I can get home cheaply, if I had to. Then I started thinking of my family around the country, Florida, Washington State etc. How would they get home? Would they not come home for a funeral because of $$$? At that point, I decided to change my points earning strategy

My first move was to get the British Airways Visa, which earns you 50,00 Avios points after spending $1,000 in three months, an additional 25,000 miles after spending $10,000 and even additional 25,000 miles after spending $10,000 more, for a total of $20,000. Currently, I am at $15,000. This has been a very painful process. I only have 4 more months to get the last $5,000. I am currently sitting on about 95,000 AVIOS points, which have been allocated for emergency travel, to get people home in case of an emergency.

Airline points can be valuable, but you should also put aside some hotel points as well. Back in 2010, there was a news story floating around about a gentlemen using his frequenet flyer points to live day to day.  Here are some excerpts from the article:


          "Kennedy, who earned $120,000 a year for a software company before being laid off 19
          months ago, earned loyalty program points by traveling for his former jobs in IT and finance."
         " Kennedy typically mixes points with cash so he can stretch his pile of points out a little
           longer. Starwood's Sheraton Four Points, for example, offers some rooms for 1,600 points and
           $30.

          He told ABC News that his loyalty points are about: 85,000 with Starwood Preferred Guest,
          400,000 with Hilton Honors, 100,000 Delta Sky Miles, 120,000 American AAdvantage, 
          200,0000 United Mileage Plus, and 125,000 American Express Membership Reward points."

         "The single Kennedy was evicted from his foreclosed home in January after being unable to pay
          the mortgage. He now collects unemployment checks in California, getting the maximum of
          $450 a week. He budgets $5 a day for food, and looks for hotels that offer free breakfasts. His
          search for a meal may be closer than he thinks: United Airlines' frequent flier points can be
          exchanged for certificates to eat at restaurants across the country."

Kennedy used his points for survival. Personal finance experts highly recommend that you have an emergency savings account equal to 4-6 months of your take home salary. This has been an ongoing goal of mine: currently I stand at about 3 months. But what happens when your emergency savings runs out. Kennedy, in the article above, had been unemployed for 19 months. My guess is his emergency savings had long been depleted. His logical choice was to use his next valuable asset: frequent flyer/hotel points. What I think is cool is that he used the tricks we use: cash and points and transfer points to other merchants: to stretch out his limited asset and survive.

I know most of us wince at the use of United Mileage Plus miles for Restaurant certificates. 500 miles gets you a $25 gift certificate. The redemption value is shockingly good.  I know these certificates can be purchased for a few dollars with a code. Kennedy's 200,000 Mileage Plus miles would get him 400 $25 certificates or $10,000 worth of food. When your choice is to spend your limited unemployment check or United Miles, the decision becomes much clearer.

I remember reading one of Frugal Travel Guy's reader success stories, where a women turned points into cash to fix her car. The exchange rate is terrible to do this, but she could not afford the car repairs. Her points came to the rescue. For some people, having a working car is the difference between having a job and not having a job.

I know these are extremes, but in this crazy economy of ours...you need to have a back-up plan or two or three back-up plans. Your points can be part of your back-up plan. Its difficult to think about putting points aside, when their are trips to far off places to be had for nothing. Trips to the Maldives or Australia are great, but do they compare to the ability to make it to a last minute wedding of a best friend, send an aunt to help her child after a fire or make it home to say good-bye to a family member?

Points can take you all over the world for vacation or help you in a pinch. Its how you use them!

Oh, a quick update on Grammy...she is doing great! Every time someone counts her out, she comes back fighting like a champ! I got the opportunity to see her a few months ago on her way back to Connecticut from Florida. . .

What's in our wallet?

JD:

As Chris mentioned in a post last week, I used to come to Happy Hour and plop down a new credit card almost every few months. Credit cards sign-up bonuses are the easiest way to increase your frequent flyer and hotel miles accounts. Many people ask me what I have in my wallet, so I thought I would share with you.

I am rocking the OneWorld Alliance credit cards:

British Airways Visa

AAdvantage Citi Visa Card

I signed up for British Airways card earlier this year. I received 50,000 Avios points after my first purchase and 25,000 more for spending $10,000 and $20,000 respectively for a total of 100,000 miles. My plan was only to hit the $10,000 spend and bank the additional 25,000 points and lay the card to rest. However, I have met the spend limits on my most recent credit card churn (more about that Friday), so I am going to go for the additional 25,000 miles by spending an additional $10,000.00.

I always like to keep two credit cards in my wallet, just in case one does not work. This is the reason for the American Airlines card. Once or twice I have been at the grocery store and my credit card did not work. I had no cash, debit card or other credit card. Embarrassingly, I would have to ask to come back to pay. I vowed never to have that happen again. Two credit cards with me at all times is now a new rule.

That is what I have in my wallet. What’s in your wallet? 

Chris:

Well JD I'm glad you asked!

I am a little behind JD as I just wrapped up my latest credit card spends last month. So if you would have asked me in July and August I would have said the Citi AAdvantage Visa and American Express cards. But now that those spends are over and 100,000 AAdvantage points are in my account I have moved back to an old stand-by and a new friend in the Chase Sapphire Preferred and the Chase Hyatt Visa.

I love the design of both of those cards...they are just great to look at and the perks are OK I guess ;).

Like JD I primarily use one card for most of my transactions and that is the Sapphire...it just has great benefits with the 2 points per dollar spent on restaurants and travel, one point on everything else, the 7% annual dividend and the 1:1 transfer ratio with some great programs such as United and Hyatt.

I keep the Hyatt Visa in my wallet in case something goes wrong and they won't accept the Sapphire.

Finally I take both of these cards when I leave the country because neither has a foreign transaction fee, which has saves me money.

OK, now it's your turn...what cards are you holding on to right now?