Summer is the busiest season for Americans traveling abroad. According to the Bureau of Transportation Statistics, over 26 million people, or nearly 30% of all annual international commercial passengers, departed on scheduled flights abroad during the summer months in 2010.

With the economy continuing to recover, the positive growth in the number of people traveling internationally, witnessed from 2009 to 2010, is expected to continue in 2011.

However, the U.S. dollar is at a three-year low and the Euro has increased to the point that it is now worth about $1.50, which makes it ever more important for people to be careful about how they spend money abroad. Since it’s better to use a credit card overseas than rely on cash or travelers checks for a number of reasons—most notably the fact that Visa and MasterCard provide some of the best exchange rates possible—the question becomes, what are the best credit card companies for foreign travel?

The primary factor in determining a credit card’s applicability to overseas travel is the presence of foreign transaction fees. According to the Pew Charitable Trusts, 91% of bank cards have fees that make every purchase processed abroad cost about 3% more. Therefore, a no foreign transaction fee credit card can save you a lot of money on a trip overseas.

It used to be that Capital One was the only credit card company with credit cards sans foreign transaction fees. However, other issuers—spurred on by the success of these products—have entered the fray over the last couple years. Chase now offers three credit cards without foreign fees—the Hyatt Credit Card, the Chase Sapphire Preferred Card and the British Airways Visa Signature Card. Citi offers one, the ThankYou Premier Card. And American Express has one charge card, The Platinum Card.

Still, when it comes to variety, Capital One remains the leader of this credit card segment, given that every card the company offers has no foreign transaction fees. This extensive offering simply gives consumers options. Whether you have excellent credit, bad credit or no credit at all, you’ll be able to find a Capital One credit card well-suited for overseas travel.

Don’t think that a no foreign transaction fee credit card loses its worth within U.S. borders, however. There are many interesting rewards and low-interest offers within this segment that make these cards great options for everyday spending as well. Ultimately, your trip might therefore serve as a great excuse to make a credit card upgrade.

Remember though, while credit cards can be extremely useful for overseas travel, there are a few things to watch out for when using one. First, never sign a bill or check expressed in U.S. dollars when traveling abroad. Foreign merchants often offer a “service” called dynamic currency conversion, which entails converting purchase totals into U.S. currency, ostensibly to simplify things for American customers. However, they truly do this in order to charge high exchange rates and pocket a profit.

Second, consider carrying your passport when paying with a credit card, especially in light of a recent European Union resolution that makes it easier for merchants to deny the use of magnetic stripe credit cards as a way to reduce fraud.

( Source: CNBC )