Credit card: magnetic stripe vs. chip & pin

Before leaving for my Europe trip in June, I called my credit cards customer service to let them know I will be visiting a few European countries. I also stopped by the local banks and let them know I might be using my debit cards for incidental money withdraw at the foreign ATMs.

There were a few things that I learn and can be useful for you:

1. It's always good to let your bank/credit card companies know in advance that you'll be travelling to other part of the country or overseas, so when you're using the card in a 'strange' place (rather than your regular spending patterns/locations), they will not freeze the account for 'suspicious activity.' It can be difficult to de-freeze the account when you're overseas and need to make long distant/international call to the customer service.

2. It's good to have a separate 'travel account' under your regular saving/checking accounts. You only put enough money for your trip in this account. Just in case your wallet got stolen or you lost the card, you can minimize the 'damage.' On the other hand, if you need more money, simply call the bank and they can transfer the money from your main account.

3. Carry more than one card - just in case one does not work, you can use an alternate card. Many stores that I went to does not accept American Express card. Some will not accept credit card at all, so you need to get cash with your debit card.

4. Although most ATM machines only take 4-digit security pin, some do allow you to have a longer one. However, ATMs in Europe only take 4-digit pin and you should avoid starting the pin with 0 (zero).

So, I did what I was supposed to do and had no major problem using my credit or debit card in Europe. The only 'problem' was, I noticed some of the ATMs in Europe only accept cards with chip. As you know, the credit cards or ATM cards that we use in the US have magnetic stripe at the back. However, European countries, Japan, Canada and some other countries have adopted the cards with chip and required users to key in pin code.

According to an article I read in the NY Times, a research found nearly half of American cardholders who have traveled abroad in the past few years have had some problem using a debit or credit card, and 16% said their card was rejected because of this issue with magnetic stripe acceptance overseas.

Unfortunately, it's not likely that American financial institutions will switch to the chip & pin card in the near future. If you're traveling to Europe, make sure you are prepared!