Banking overseas is more than just putting your card in an ATM. When you travel abroad, banking overseas involves knowing three things: how to avoid paying bank fees, how to eliminate foreign transaction charges, and how to get a good exchange rate. I know too many people who travel overseas and pay ATM fees and get hit with credit card transaction fees. There’s no need for it. You didn’t save up all this money in order to give it the banks, right? I know I didn’t. I want to keep it all for myself, because every avoided fee is more money for food, drinks, and activities.
Three years ago (to the day), I wrote about this topic, but since banking rules are constantly changing, I thought it was time to update the article in order to provide more current and in-depth information. Here is how you eliminate ALL bank fees when you travel:
First, eliminate ATM fees
ATM fees can really add up. Let’s think about it: While you’re on the road, you will probably withdraw money from an ATM twice a week. Fees vary around the world, but on average you end up paying $5 USD per withdrawal. That is $10 per week, $40 per month, or $520 per year. Even if you only use the ATM half the time, that’s still $260 USD per year. Most travelers I know go to the ATM even more than twice a week, which only increases the amount in fees they pay. Why give banks money you need for travel? You did a lot of work saving your money — don’t waste it by giving it to a bank. Here are four ways to eliminate fees:
First, pick a bank in the Global ATM Network. This is a network of large banks that have come together and waived fees and allow for free ATM withdrawals. While they have the highest fees ($5 USD per withdrawal) for banks outside their network, by using partner ATMs you can avoid ATM charges.
Below is a list of major banks in this alliance:
- Bank of America (United States)
- Barclays (England, Wales, Spain, Portugal, Gibraltar and certain countries in Africa)
- BNP Paribas (France, Ukraine)
- China Construction Bank (China; Bank of America card holders only)
- Deutsche Bank (Germany, Poland, Czech Republic, Spain, Portugal and Italy)
- Banca Nazionale del Lavoro (Italy)
- Santander Serfin (Mexico; Bank of America card holders only)
- Scotiabank (Canada, Caribbean, Peru, Chile, and Mexico)
- Westpac (Australia, New Zealand, Fiji, Vanuatu, Cook Islands, Samoa, Tonga, Papua New Guinea, and Solomon Islands)
- ABSA (South Africa)
- UkrSibbank (Ukraine)
Be sure to check with your local bank on specific coverage areas. There are some exceptions, i.e., if you use your Barclays card in one country, there might not be a fee, but in another, there may be. Double-check before you go! Note: Bank of America charges a 3% foreign transaction fee on all withdrawals not in USD, though in Mexico you can use Santander to avoid the fee.
Secondly, if you are a US resident, the best bank to use is Charles Schwab. Why? Charles Schwab has no fees and reimburses all your ATM fees at the end of each month. You will need to open a high-yield checking account in order to qualify, but there is no minimum deposit required and no monthly service fee. Their ATM card can be used in any bank machine around the world, and you’ll never pay a fee. This is my primary bank card. Since getting it, I’ve avoided all ATM fees. It’s saved me hundreds per year.
Third, get a low-fee card. I use HSBC as my backup because HSBC has ATMs all over the world and charges only $2.50 USD per ATM transaction when you use a non-HSBC ATM. While it’s not as good as zero, its still better than what a lot of other banks charge. Additionally, Capital One doesn’t charge any withdrawal fees, but you do have to pay any fees charged by the local bank.
Finally, ask your local bank or credit union. Not charging ATM fees has become a widespread practice over the last few years, so make sure to ask your local bank. For non-US citizens, I like these two cards:
Norwich & Peterborough Building Society (UK residents)
MORE: If you are looking for other ways to cut wasteful expenses on the road, visit this collection of all my best tips for further money savings.
Second, avoid credit card fees
The next major fee we need to get rid of is the credit card foreign transaction fee. Most credit cards change a 3% fee on purchases made overseas. That can add up since most of us use our credit card for everything. It’s become a lot more common for credit cards to waive that fee since if you use your card a lot overseas, you’ll probably use it a lot anywhere. My favorite no overseas transaction fee cards are the Chase Sapphire Preferred, Starwood American Express, Barclay Arrival Plus, Capital One, and Citi Premier.
If you use these cards overseas, you won’t pay 3% and you’ll save a lot of money! For non-US citizens, check the following websites that list cards that might not charge an overseas fee:
For UK citizens, check out this no-overseas-fee card too: Post Office Credit Card UK
By using one or two of the suggested ATM cards and the above credit cards, you’ve eliminated all bank fees while you’re abroad. Not bad, huh?
But you aren’t done yet? There are still other “hidden” bank fees banks you will need to avoid:
Minimize the Exchange Rate “Penalty”
Every time you use your card overseas, your local bank coverts the transaction into your local currency for billing purposes and takes a little off the top for doing so. Thus the official rate you see online is not what you actually get. That’s the interbank rate, and unless you become a major bank, you’re not going to get that rate. All we can do is get as close as we can to that rate. To avoid being on the real losing end of conversion, follow the following tips:
Use a credit card — Credit card companies get the best rates. Using a credit card will get you an exchange rate closest to the official interbank currency rate so avoid an ATM or cash if you can.
Use an ATM — ATMs offer the best exchange rate after credit cards. They aren’t as good as credit cards since commercial banks take a little more off the top, but it’s much better than exchanging cash. Money exchange offices offer the worst rates because they are so far down the food chain, they can’t get the best exchange rate (plus, they usually charge a commission as well).
Don’t use ATMs in weird locations — Using those ATMs you find in hotels, hostels, local 7-11s, or some other random place is a bad idea. They’re convenient, but you’ll pay for that convenience. They always charge high ATM fees and offer horrible conversion rates. Skip those ATMs and find a major bank.
Don’t change money at airports
Most exchange bureaus in airports are so far down the financial food chain they don’t have the clout to offer good exchange rates. The rates you see at airports are the worst — never, ever use an exchange bureau there unless you absolutely have to. Another tip: avoid using the company Travelex at all costs — they have worst rates and fees. Never, never use them. Avoid their ATMs too!
Always pick the local currency
When you use your credit card abroad, you will often be given the option to be charged in your home currency (i.e., instead of being charged in euros, they will charge you in US dollars). Never say yes. The rate at which they are converting the currency is always worse than the rate your bank will give you. Pick the local currency and let your credit card company make the conversion. You’ll get a better rate.
Bank fees can add up to some serious money over the course of a long trip. If you want to save money, you need to be proactive when it comes to banking and currency exchanges. I see too many travelers visit the ATM all the time without paying attention to the latest exchange rates. You’re on the losing end of the stick that way. Be smart and bank smart. The tips in this article will have you avoid paying extra fees to banks. I haven’t paid a bank fee while traveling the world in over five years and you shouldn’t either.
And with these simple tips, you’ll never have to again.
THINK YOU’RE DONE? HARDLY. THERE ARE STILL OTHER IMPORTANT BANK SMART TRAVEL TIPS TO LEARN:
—-> How to pick the travel credit card for your trip
—-> How to save money while you travel
—-> 12 things you should NOT do when you travel