A local credit card can be used not only for domestic purchases but also for payments abroad and on international websites.
However, before using your card for international transactions, there are several important things you should know.
How to Enable Your Credit Card for International Transactions
Before traveling overseas, make sure your credit card is activated for international use.
The activation process varies by bank, but it can generally be done through:
- Mobile banking apps
- Internet banking services
- The bank's customer service hotline
- A local branch office
You should also ensure that your card carries a Visa, Mastercard, JCB, or American Express logo, as these payment networks are widely accepted worldwide.
Guide to Making International Transactions with a Credit Card
Using a credit card abroad is generally similar to using it in your home country. Here are the basic steps:
- Confirm that the merchant accepts your card network.
- Tap your card for contactless payment, insert it into the payment terminal, or use a digital wallet linked to your credit card.
- Review the transaction amount before approving the payment.
- Keep the receipt or proof of payment for your records.
- Check your transaction history through your banking app to ensure there are no unauthorized charges.
Credit cards can also be used for online shopping, hotel reservations, transportation bookings, and vehicle rentals abroad.
Understanding Exchange Rates and International Transaction Fees
When using a credit card overseas, the transaction amount will be converted into your home currency and may be subject to additional fees.
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Currency Conversion Fees
These fees apply because the transaction is made in a foreign currency and then converted into your home currency using the exchange rate set by the card network (such as Visa or Mastercard) and the issuing bank.
As exchange rates fluctuate, the final amount charged may vary.
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Foreign Transaction Fee
Some banks charge an additional fee for overseas purchases, commonly known as a foreign transaction fee.
The fee varies by bank and is usually calculated as a percentage of the transaction amount.
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Dynamic Currency Conversion (DCC)
When making a purchase abroad, you may be offered the option to pay in your home currency instead of the local currency.
This service is called Dynamic Currency Conversion (DCC), where the currency conversion is handled by the merchant or payment provider rather than the credit card network.
Should You Choose the Local Currency or Your Home Currency?
In most cases, choosing the local currency (such as Japanese Yen, Korean Won, or U.S. Dollars) is generally recommended over paying in your home currency through DCC.
Benefits of choosing the local currency:
- Often provides a more competitive exchange rate through Visa, Mastercard, or other card networks.
- Helps avoid additional fees commonly associated with DCC.
- Offers greater transparency in the conversion process.
On the other hand, choosing your home currency through DCC may seem convenient because the final amount is displayed immediately in your own currency.
However, the exchange rate used is often less favorable, resulting in a higher overall cost.
For this reason, when a payment terminal or cashier asks which currency you would like to use, it is usually more beneficial to select the local currency of the country where the transaction is taking place.
