New Solution for European Credit Card Problem

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Been to Europe lately? Then you’ve probably come home saying something along these lines: “My credit card didn’t work at the gas station/metro/bus depot!” That’s because Europe has largely switched from magnetic strip cards used here in the U.S. to what’s called a “chip-and-pin card.” Bottom line for Americans: Chip-and-pin card readers—most importantly, those used in self-service kiosks at the aforementioned gas stations and metro stations—don’t read our U.S. cards, rendering them useless in many situations.

It’s a major problem for U.S. travelers, and since a wholesale switch here in the States would be prohibitively expensive for the banks, the only feasible solution is a stored-value card travelers can load with money before they depart. Thankfully, Travelex just announced the first such card, a stored-value dual-mode chip-and pin card for American travelers to Europe. It’s available in euros and pounds, and it also has a magnetic stripe for places that still use that system.

The good news is that Americans can finally carry a card that lets them use automated machines that don’t accept cash and no longer accept American stripe cards. The bad news is that the exchange rate to buy it is not good. At press time, $1 = €0.718 on the card, but $1 = €0.748 on the open market. The discrepancy is similar for pounds: $1 = £0.609 on the card, but $1 = £0.633 on the open market. Considering you’re likely putting several hundred or thousand dollars on the card, these rates cost customers significant cash.

Another drawback: So far, you can buy it only at retail outlets. You can find the outlets on the Travelex website. 

Maybe this move will finally get the big banks and card issuers to get off their butts and start issuing dual-mode credit cards. I’ll have more details in a column in the coming weeks.

Readers, would you buy a stored-value chip-and-pin card before your next trip to Europe?