Smart chip, or Chip-and-PIN technology, is a hot buzz word these days for credit cards. The technology is becoming increasingly prevalent in Europe, and if your card doesn’t have a smart chip you may not be able to use it when you travel abroad. Additionally, if a card charges foreign transaction fees the price of shopping abroad can quickly add up. To help alleviate extra costs and make paying for items easier and more secure, finding a credit card that features both a smart chip AND no foreign transaction fees is the optimal solution. It can be a little challenging, but never fear we’ve done the research and found the best smart chip cards with no foreign transaction fees to use in Europe.
Smart chip: What is it?
A typical credit card has a magnetic strip that contains the card information. To use it, the cardholder swipes the card through a credit card reader and and then signs. A smart chip enabled card has a microchip that contains the same user information a magnetic strip would. To use a smart chip card, you insert it into a payment terminal instead of just swiping it through. (Note that in the US, smart chip cards also have a magnetic strip so they can be used for purchases in the US and abroad.)
The smart chip is a more secure device for identifying information than a magnetic strip because it is harder to copy or use fraudulently. This is because magnetic strips provide the same data every time you make a purchase, but chip cards encrypt different data for each transaction. With the smart chip, if a thief were to steal data from a single transaction and create a counterfeit card, the card would be identified as previously used data and not authorized.
Chip-and-PIN vs Chip-and-Signature
Chip-and-PIN is an additional security measure provided by credit card issuers to help prevent the fraudulent use of your credit card. A chip-and-PIN enabled card has a smart chip in it, and the cardholder must enter a PIN to complete the transaction, similar to using a debit card. This makes it much more challenging for hackers to steal your credit card, because instead of just obtaining the information on the smart chip they would also need to know the PIN number in order to fraudulently use the card.
Some US issuers offer Chip-and-Signature as an alternative. It’s not quite as secure as Chip-and-PIN because the user signs for the purchase rather than entering a pin. Since Chip-and-Signature cards feature a smart chip – just like Chip-and-PIN cards do – they prevent counterfeit fraud, but not stolen or lost credit card fraud. Chip-and-Signature cards are almost as widely accepted in Europe as Chip-and-PIN cards. However, certain merchants may not take chip-and-signature cards, and you may not be able to use them at automated locations such as purchasing a metro or train ticket in Europe. Still, since US card issuers are not yet issuing Chip-and-PIN cards, Chip-and-Signature is your best option if you’re an American who is going to travel abroad and needs to use a credit card.
Foreign Transaction Fees: What are they?
Foreign transaction fees are often charged by credit card issuers when you make a purchase outside of the U.S. The reason for the fee is because the credit card issuer is changing the purchase you’re making from foreign currency into dollars. If you’re traveling abroad and using your credit card to pay for everything, these fees can add up quickly since they are usually about 3% of the purchase. The good news is that some credit cards do NOT charge a foreign transaction fee, which can end up saving you a bunch of money.
Where can you find a card with a smart chip and no foreign transaction fees?
The US has been a step behind in adopting Chip-and-PIN technology. However, Chip-and-Signature technology is becoming more prevalent with US credit card issuers. We’ve looked high and low and put together a list of the best cards offering Chip-and-Signature technology with no foreign transaction fees. As you might expect, a large percentage are travel cards, but there are some cash back and rewards cards too.
Credit Cards with Chip-and-Signature and NO foreign transaction fees
Barclay Arrival PlusTM World Elite Mastercard®
BankAmericard Travel Rewards® Credit Card
Starwood Preferred Guest® Credit Card from American Express
Marriott Rewards® Premier Credit Card from Chase
Citi® Hilton HHonors™ Reserve Card
British Airways Visa Signature® Card
Business Platinum Card® from American Express OPEN (a NextAdvisor advertiser)
Starwood Preferred Guest® Business Credit Card from American Express OPEN
Credit Cards with Chip-and-Signature WITH foreign transaction fees
Citi® Platinum Select® / AAdvantage® World Mastercard® (3% of each purchase transaction in US dollars)
BankAmericard Cash Rewards™ Credit Card (3% of the U.S. Dollar amount of each transaction made in a foreign currency or made in U.S. Dollars that is processed outside the United States.)
Blue Cash Preferred® Card from American Express (2.7% of each transaction after conversion to US dollars)
Blue Cash Everyday® Card from American Express (2.7% of each transaction after conversion to US dollars)
Citi® Dividend Platinum Select® Visa® – $100 Cash Back (3% of each purchase transaction in US dollars)
Citi® Dividend® Card for College Students (3% of each purchase transaction in US dollars)
Citi ThankYou® Preferred Card – Earn up to 30,000 Bonus Points (3% of each purchase transaction in US dollars)
SimplyCash® Business Card from American Express OPEN (2.7% of each transaction after conversion to US dollars)
CitiBusiness®/AAdvantage® World Mastercard® (3% of the U.S. dollar amount of each purchase made outside the U.S., whether made in U.S. dollars or in a foreign currency.)