Expat Money Tips: Apply for a Credit Card
Apply for a credit card in the host country as soon as you are able to, even if you want to maintain a credit card from your home country. You don’t have to use it, but holding a local credit card has several advantages:
- You may need a credit card with a local address for online ordering.
- If you use it and pay it off regularly you begin to build a good credit rating in your host country. If you are planning on staying for an extended period (or permanently) then building a good credit history as son as you can will be a definite advantage. Many companies will check credit for everything from renting TVs (in the UK) to renting a flat.
- Holding a credit card, even a second credit card of you already have one from your home country is a good back up in case of emergencies. If you have used much of your savings for flights, cars, deposits on homes, essential white goods and furniture purchases and possibly school fees then a credit card is a good back up in case the car gets totalled and you need transport before the insurance is sorted or there’s a flood in your house and carpets and furniture need to be replaced and hotel fees need to be paid until insurance is sorted or there is an emergency at home and you need one or more airline tickets in a hurry.
If you choose to use a credit card rather than just hold onto it for an emergency, make sure you pay it off each month—don’t spend more than you can afford. If you skip payments this will begin to reflect poorly on your credit rating, making you even more of a financial risk as an expat. Also, if you don’t pay it off each month the interest will begin to accumulate and you’ll have much more to pay off.
Depending on the host country, the process is usually not too difficult. Speak to individual companies to find out what they need for your application. You may need a letter of reference stating your good credit history from your bank at home or other documents. Often it is easier once you have lived in your host country for three years, but if you speak with a representative directly you should be able to work out an acceptable deal.
Bad advice from an ill-researched article. UAE for instance offers credit cards at APR 30%. Why? There is no credit rating agency in Dubai, so there is no advantage in building up a good credit record! Worse still they can change your credit limit up or down on a whim, and make you pay any balance above that new credit limit , if you don’t pay they can block your exit at the immigration office at the airport or worse still you can end up in jail. These are not UAE banks doing this, these are UK banks in Dubai, Lloyds, HSBC, Barclays, SCB, RBS. Shame on these bloodsuckers.
Really the situation in European Union is quite dangerous, due to the debt crisis in Portugal, Greece and Ireland. The European Comission should take care about this.
I have to agree with the comments made above. Generally, credit ratings differ from country to country so it would be best if you did your homework first before taking out a credit card outside of your home country.
As an example, when i was abroad, while i didn’t take out a credit card, i was hit hard by the money transfer rates there. To make matters worse, getting my money converted to the local currency ended up costing me more in fees than i expected. So i eventually used RationalFX.com as a service for taking travel money due to the problems i’ve detailed above.
Generally though, it really is important to be extra careful about taking out a credit card abroad for the reasons i’ve detailed above. The currency between the countries really do make a big difference.