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

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.