There was an article in a recent issue of National Geographic Traveler that highlighted some issues travelers may have when trying to use credit and debit cards overseas. The article wasn't posted online but I have posted the main points below.
International Transaction Fees: Credit and debit cards may be a convenient and safe(r) alternative to carrying around cash or credit cards, but be aware that you will be charged up to a 3% fee on every transaction (in addition to the set-fee charged everytime you use a non-branch ATM). This includes purchases AND cash withdrawals from debit cards (one exception to this riule is cards issued by Capital One–they do not charge this fee).
Cash-Based Economies & Lack of ATMs: Not every country relies upon the credit card as much as America. Many countries still have primarily cash-based economies. When traveling in these countries you may find that many merchants do not accept credit cards, so it's a good idea to always have a good amount of cash on you. ATMs may also be scare, so make sure to withdraw as much as you think you'll need for a bit because your next chance to access and ATM might not be for a while.
Credit Card Use & Processing Differences: The whole "swipe your card" practice that is so commonplace in the US is quite outdated and is not used much in many parts of Europe and Asia. Instead most people have smart chips imbedded in their cards so that all they have to do is wave the card in front of a processing machine and input a PIN in order to make a transaction. Countries such as Japan are going beyond this and doing away with the cards altogether, preferring to store credit card and bank information in mobile phones and just waving the phone itself in front of a transaction machine. If you don't have an IC chip in your card (they are becoming more prevalent, many Chase and American Express cards have them built-in) you may be out of luck (or at least inconvenienced) when trying to use your card. (If your card is rejected, don't worry–just ask to speak to a manager and you'll be able to make a transaction with any Visa, Mastercard, or American Express-branded card. The companies require that merchants accept ALL cards, regardless of the technology they are based on. They might just need to take it back to the terminal and manually enter the information.)
Your American PIN or IC Card May Not Work Overseas: Going along with what I said above, your IC-embedded credit card or American-issued PIN may not work abroad when making purchases (ATMs should usually still be OK). Many machines used abroad will only accept PINs issued by local banks/card issuers.
Avoid Automated Machines: If possible try to avoid the combination of automated machines and credit cards while abroad (e.g. – parking meters, gas station pumps, vending machines, etc.). If something goes wrong there's not much you can do about it.
