If you're going overseas, a credit card is essential. Not only does it provide you with a financial buffer to cover any unforeseen expenses, it also allows you to make purchases without worrying about carrying large sums of foreign currency.

Visa, MasterCard and American Express are now almost universally accepted, so using your credit card overseas is just like using it at home, but it's easy to choose the wrong card and end up getting stung by overseas transaction fees.

Here are the features you should look for in a travel credit card:

Travel insurance

If you've travelled overseas before, you'll know that travel insurance can cost upward of $500 per person. Many credit cards (particularly platinum and other high end cards) offer free international travel insurance.

The annual fee on these cards can be quite low (for example the St George Platinum has an annual fee of only $89), so you could get the card and take it with you for emergencies only, or even leave it at home and close the account when you don't need the cover anymore. Plus, the insurance usually covers the cardholder and their immediate family, which makes it even better value if you're planning to travel with your family.

Be aware than some cards require you to have purchased your tickets using the card to be eligible for the insurance.

Some cards (such as the American Express Qantas Premium) also offer travel inconvenience insurance, which will cover you for lost or delayed luggage, missed connections and flight delays.

Quite a few budget cards also offer domestic travel insurance and/or travel inconvenience insurance, in case you're planning an Australian holiday.

Make sure you carefully read the travel insurance product disclosure statement (usually available from the bank's website) when comparing cover.

Emergency overseas card replacement

If, like me, you manage to make a hobby out of losing your wallet, you'll understand the value of emergency overseas card replacement. Most banks offer this, but it usually incurs a fee (around $50). Some offer the service for free as an included feature of the card.

Obviously, the particular bank you're with will make a difference as to how quickly your replacement card will arrive. An international bank like HSBC that has offices in the country you're visiting can probably produce and courier a new card much more quickly than an Australian bank.

It's probably a good idea to take a second card, either an additional card linked to the same account, or even a completely separate card such as a Visa if you already have a MasterCard and vice-versa.

Overseas transaction fees

It's easy to get stung by fees. Most Australians don't even know their card interest rate, let alone the intricacies of their card's fee structure which is usually hidden in 300 pages of terms and conditions.

The important ones to look out for are overseas ATM fees and currency conversion fees. ATM fees are typically a flat amount that you will be charged for using your card in a foreign ATM (around $4-$6 is average). The currency conversion fee is usually a percentage of the amount you withdraw and can range for 1% - 3.5%. On a withdrawal of £500 British pounds (around AUD$946 at the time this article was written), 3% is over $28.

Keep in mind that if you're getting a cash advance from your credit card while overseas, you'll also be charged the cash advance fee and an additional percentage (usually around 3%). You'll also begin accruing interest on the amount immediately at a high rate (typically around 20%). For your cash needs, you're much better off using your normal bank card or getting a cash passport.

What next?

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