7 credit card rules in Europe: U.S. magnetic strip vs. smart chip — both should work

by Charlie Leocha on June 4, 2010


I just returned from a week-long trip through Germany and Switzerland. I used good old American credit cards with the normal magnetic strip on the back. They were never questioned at hotels, train stations or restaurants. However, many travelers are finding that American credit cards are being rejected because they don’t contain smart chips.

USAToday just published a story about problems American travelers are having in Europe using credit cards. While I haven’t had such problems with frequent trips to Europe, I can see the potential for problems. Hence, these suggestions.

1. Let your credit card issuer know you are headed overseas and where you will be traveling. This way they will unlock your card for cash advances and will not flag foreign charges for antifraud follow-up that freezes the use of your card.

Many credit card issuers allow card holders to make notes about upcoming foreign travel online. This avoids the need to wait on hold.

2. Always travel with at least two different cards and know your PIN (personal identification numbers). For European travel select a numerical PIN since the letters on European machines don’t match letters on many U.S. machines.

Normally try to have a Visa or MasterCard available with a 4-digit PIN. Many establishments don’t take American Express and DiscoverCard is not used in Europe.

3. Virtually every credit card processing machine in European restaurants, hotels and stores can process a magnetic-strip card as well as smart chip cards. It just takes a few extra steps. Ask for a manager or ask the clerk to simply follow the instructions that appear on the machine. Human beings can make your card work.

4. If using an automated machine and your card is rejected, such as some ATMs, new parking meters, newer gas station pumps and railroad ticket machines in some French and Spanish train stations, go to the ticket window or see the station attendant. The transaction can normally be processed there. If the bank, gas station or ticket window is closed, you are out of luck.

5. If given the choice of purchasing your product in local currency or having the store convert it to U.S. Dollars, opt for the local currency. The exchange rate received through the Visa/MasterCard system is better than the store’s bank exchange rate. Plus, all foreign transaction fees still apply whether the charge is in U.S. Dollars or Euros.

6. If your credit card is frozen for unexplained charges, call the number on the back of your card. These numbers will accept a collect call. Better yet, before leaving the U.S. jot down the number and keep it with you in case of theft.

Wait to speak with a human being representative. Some travelers have used the automated approval system and find that a rejected transaction that was subsequently paid for with cash it automatically paid, resulting double billing that then needs to be sorted out with your card.

7. Finally, always try to use a card with no foreign transaction fees and minimal ATM charges. Read my column about that here. Basically, CapitalOne still does not charge a foreign transaction fee and many smaller banks and credit unions issue cards with no foreign transaction fees or hefty ATM charges.

Enjoy travels in Europe with the cheaper Euro this year. It’s certainly a bargain compared to this time last year. When faced with any problems using credit cards, ask for the next person up the chain of command. They should be able to help. But, always keep a stash of cash to pay for the basics in case the U.S. magnetic stripe adorned credit card is turned down without an embedded smart chip.

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  • jared

    question you say “Always travel with at least two different cards and know your PIN” are you talking about debit cards or credit card or both?

    is there a scenario where of “swipe and pin”? other than cash advance which has very different rates?

  • http://www.tripso.com/author/leocha Charlie Leocha

    YES. Swipe and pin with BOA costs you 3% more than with Capital One or more credit union cards. If you are using an ATM, BOA adds on another 3%. Capital One has cash advance charges, but many credit union cards limit ATM fees to $1.

  • http://www.bonjourparis.com Karen Fawcett

    Charlie — as usual you are right. A few caveats however:

    Paris’s metro machines do not accept credit cards that don’t have a smart chip, so plan on spending extra time waiting in line at the booth if you’re buying tickets.

    Ditto for the French rail system.

    PLUS – if you happen to be in the French countryside where there isn’t someone to swipe your credit card and you’ve run out of gas – you may be there until the next morning or until someone takes compassion on you and will accept your cash in exchange for pumping some gas into your car so you can get to an autoroute where stations are manned 24 hours a day.

    Please please – never take out cash advances on credit cards or you’ll be paying 18% (??) interest. Use DEBIT cards for cash advances and you’ll be paying a minimal transaction fee.

    Please check with your credit/debit card card company, advise them of your travel plans and know what to expect.

    PS – there are some banks (BNP – Parisbas) that rebate transaction fees to B of A customers.

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  • http://www.JohnnyJet.com Johnny Jet

    Nice job Charlie

  • Ernie

    Anyone have thoughts on opening an account in a European bank, and getting a credit card at that bank? This is for a US citizen with a USA mailing address. Is this feasible or does it not make sense? Travel, for pleasure, 2 – 4 times a year.

  • Barry Graham

    It’s beyond belief, and the kind of thinking that explains why the banks had to be bailed out recently, that the banks wouldn’t offer cards with smart chips, given that it would increase customer satisfaction and it would increase revenue since there are for sure instances where people have not been able to use their cards.

  • carey

    Be careful when allowing a “human” to process the transaction.. as a naive traveler in Israel, this action resulted in a maxxed out card, with charges coming from Jordan and Syria!!

  • http://www.alaskatravelgram.com Scott McMurren

    Charlie–I can vouch for Karen’s note about cc being rejected at Paris’s Metro stations. We just returned last night. A couple of shops rejected our cards. Puzzled looks/language barriers didn’t help things…until I simply paid with cash. Otherwise–we had no problems in Paris or in the French countryside (aside from buying too much wine).
    We carried the Capital One card specifically to get around rip-off 3 percent “foreign transaction” charges. But I was taken by surprise at Printemps (the fancy Paris dept store) when the nice lady asked me “Dollars or Euro”. I picked USD. A mistake, in retrospect.
    Thanks for reminding people to call their banks before departure–it made a big difference.
    Final note: I printed out Capital One’s terms/conditions in advance in case I had problems re: insurance at Europecar. The AutoEurope folks advised me to do this. But–no problems.
    Thanks for the wrap-up. And I’m thrilled to report the dollar buys more euros today than even last week!! It’s a great time to visit Europe!

  • JM

    RE: local accounts
    Local bank accounts can be appealing, but watch out for US tax and reporting issues. If you have more than $10,000 (amount in account, NOT income on account) in an account, it has to be reported on your tax return (see Form 1040 Schedule B, part III). Also, there are some “new” rules with a form called the FBAR which might trap you (http://www.irs.gov/businesses/small/article/0,,id=148845,00.html – the rules are not really new, but the interpretation/enforcement took an upsurge last year).

    If you decide to go with an overseas account, seriously consider both of these requirements, as well as in which country you hold the account (avoid “tax havens,” be aware of FATF) and figure out how you will either remember to report and/or stay under the reporting limits.

    This post is not intended to be tax or legal advice, no person may rely on the information herein, and no relationship of any sort is hereby created.

  • JL

    re: foreign bank accounts

    About 10 years ago, I tried to open up an account at Credit Lyonnais in Paris. Without a paycheck direct deposit, the manager wasn’t interested, and basically told me to go away. Don’t know if this was typical, or if things have changed since.

  • honeyclair

    re: foreign bank accounts
    my daughter spent last summer attending college in london last summer. we tried to set up a bank account for her but since she was there only 6 weeks, the university told us that it would not be allowed. the plan was for her to use her atm card on a regular basis (probably several times a week). i was not looking forward to the charges but found a solution. we opened two checking accounts, a student account for her, and she was allowed a second account which i used with bank of america. they have an agreement with barclay’s bank and there were no atm charges. i was also able to move money electronically on a weekly basis from my account to hers so that her entire six weeks allowance was not in her account, in case any problem arose with her account.
    it worked so well that i have kept the b.o.a. account and when i was in london this past winter used barclay’s for my atm withdrawls.
    i have been told that other u.s. banks have the same type of agreements with banks in other countries. it might be worth looking into….

  • Glenn Mitchell

    Use a Credit Union Debit or Credit card. Most do not charge fees or will refund any fees.

  • AJ

    I have notified my bank (formerly Washington Mutual) of my European travels each and every time before I depart, and each and every time my ATM card is blocked despite the notification. This required a call to Seattle during business hours when the fraud department is open (which is 8-9 hours behind) and then they say they will active the card the following day. The card invariably springs back to life just as I am returning home. Maybe this has changed since the Chase takeover.

    I have had zero problems with credit cards — American Express and Visa — for charges, but try to avoid using them for cash advances due to the incredible fees and interest.

  • klm

    I’ve never had a problem using my American Visa card in Poland. And sometimes my local cards with smart chips get swiped instead of inserted!
    On the other hand, make sure you have a MasterCard in Germany. I’ve had problems trying to pay at smaller shops and Lidl, discovering too late that they don’t take Visa. (Larger hotels will, of course.)

  • Graham

    Let me tell you a story about life here in the UK. Not long before chip and pin was introduced here we were bombarded with messages about it which boiled down to “no chip and pin, no use, no excuses”.

    I was in a local retailer and he reiterated this to me so I asked him “what will you do if someone tries to make a purchase and presents a card without a chip – for instance an American?” He looked a bit nonplussed so I suggested he contacted his card processor and ask.

    Next time I saw him he thanked me and said he now knew what to do but wondered why he had had to ask rather than being told. All these years on, I reckon there are still people who think that chip and pin is the only way.

    Now, it works the other way round as well. In Hong Kong in January 2009 my chip and pin card was accepted and the pin worked but they absolutely insisted I sign as well! And in Montreal in 2006 a sales assistant was flumoxed when she swiped my card and it told her to insert it. I had to conduct a quick class in the workings of chip and pin!

    And don’t talk to me about New Zealand; in two months the same card was accepted chip and pin, swipe and pin and swipe and sign on multiple occasions. At first I thought it was down to the card processor but that was disproved so I began to wonder about certain machines and in the end I gave up and went with the flow.

    The good news is that the machines are getting cleverer and prompting the users and provided the users follow the prompts it shouldn’t matter whether your card has a chip or not.

  • laura townsend elion

    Open an account at Citibank. I’m employed by an international humantarian agency. We go everywhere, and there seems to be at least one Citibank in every country, even the most remote, and usually many more.

    I originally opened my accont specifically to ‘send’ money to my brother in Austraila (had his name on the account down there, and this is easier to accomplish by sending or faxing signature cards then you think), but it has been a boon to my international travels, esp. since you get ‘customer’ treatment everywhere as opposed to ‘foreign bank’ treatment.

  • http://www.budabab.com Ryan James

    The US and Australia may be easy to open bank accounts in, but in Hungary as well as much of Europe, you will need a Visa, not the credit card, but an official paper stating you are legal here for at least a year. Generally, a tourist Visa will not work. You need to have accountability here in Europe as you would at home regarding taxes and other economic legal fees that are associated with banking. Many of those laws are different than what Americans are used to. As an Ex-Pat American who authors the Frommer’s “Budapest & the Best of Hungary” 7th and 8th editions, I know from whence I speak.

  • Robert Ponterio

    I spend summer in France and use various US credit cards (magnetic strip only), except in those automatic machines that accept only smart cards. However, this year I am finding that a significant number of times when I swipe my card, it doesn’t work. Merchants in France have been telling me that they see this problem more & more. IOW The machines are supposed to accept the magnetic strip cards, but they don’t work or in some cases they work after 4-5 tries. These were clerks who knew how to use the machines, and when they couldn’t make it work, I tried myself. I now try to have cash on hand as a backup. If the problem keeps getting worse, I will really need a card with a chip, even for the vast majority of machines that do, theoretically, work with a US card.

  • Brett Kilhenny

    The times are a changing! I am here now as an Expat in Germany and the game has changed over the past week – it is getting very difficult to use your ATM card, especially in smaller cities and towns. I am trying now to find a US bank with smart chip cards – not easy! BTW – today’s date is may 14, 2011

  • Anonymous

    I’ve had issues using a US card in Europe too. Traveling to Norway in 2009 several places (grocery and other stores) only accept cards with smart chips and PIN. ATM withdrawals from my debit card always worked though. Hotels and gas stations accepted the magnet strip still.  

    The Netherlands is a credit card/tourist nightmare though! Almost everywhere they basically only accept Dutch cards! A wonderful surprise when trying to pay a 300 euro meal.. We had to just make large cash withdrawals from ATMs and use that. And the people are rude, but otherwise a lovely country:) 

    Are there even any US banks that issue smart chip cards? Why don’t they?

  • Sam Conte

    I actually just returned from Amsterdam a few days ago.  Almost everywhere we went the staff would inform us that their machines would only accept Dutch debit cards.  However, all their machines DO HAVE a swipe slot, and every time we asked them to please try our cards, they worked fine, and we did this more than a dozen times.  They just weren’t familiar with using the swipe method.  Additionally every automated train machine accepted our cards, and every ATM as well.

    Finally, we also hit up Paris, and our cards were accepted everywhere except at a few of the older automated Metro station machines.  But in that case just go to the attendant and no problems! 

  • travelgal

    I was in Holland in winter 2010 and found numerous ATMs around the country that, (to my horror!), COULD NOT connect using a Mastercard ATM/debit card.  I went to the money exchange and they were able to use my card, thank god!   I am very nervous about it now and plan to keep large sums of cash on hand, (i know, not the greatest plan either), and talk to my bank and other banks about getting a VISA ATM card.  I NEVER once had trouble in Holland or elsewhere with the VISA ATM magnetic swipe card.  Thanks for everyone’s posts below!

  • Sean Taylor

    As of December 1st, 2011 you will no longer be able to use a magnetic strip in Norway.  Period.  I am living in Norway for the year and we had no trouble until this week when they began shutting down the magnetic strip usage, with it completely shut down  on 12/1.  The advice above is getting outdated, at least for this country.

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  • http://trademachine.org/ trade machine

    These machines are indeed very helpful to us, to make our transaction become easier and faster.

  • Adam C

    hi,
    my name is adam and im from ohio.
    i only have a debit mastercard and planned my future trip to europe in the last few weeks. i wanted to get myself a credit card anyway. which type of credit cards (which bank) could you recommend to me, that dont give me so much trouble with the antifraud fees etc. if im overseas?
    i find it very disturbing be somewhere foreign and i dont have any access to my bank account unless i have to call my personal bank assistent of my home town? and what will they ask me to do on the phone? can anyone explain?

  • Antonia

    I just read that the Capital One No Hassle Rewards Master Card has no foreign transaction fees…

  • drufitz

    Amusing story. I just got back from Holland. I attempted to use my credit card for a small purchase, but it wouldn’t go through, and the vendor just let me take the bottle of water. Well, strangely enough, the charge did indeed go through. It was on my credit card statement. So even when you don’t think the magnetic strip will work, it does. Even better, my Southwest AL card through Chase bank just eliminated foreign transaction fees!

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  • http://www.facebook.com/michael.l.rowley Michael Leonard Rowley

    This story has become a lie. Making the U.S.A (not the America’s) look like a 3 rate if not 3rd world country once again. Thanks B.S. Congress President and BANKS! NOT! Can you do anything correctly here?

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  • Oldmonkey

    Smart chip credit cards can be hacked using NFC on an Android, and Android NFC can also be hacked. Must be a glutton for identity theft. Be a good idea to keep an active VPN as well, but don’t expect privacy. If your government isn’t snooping on you now, it will sooner or later; every business with a website, and every search engine

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