10 Money Tips to Keep More of Your Own Money at Foreign ATMs When Traveling Abroad
For most of us, when traveling on an adult gap year, our goal is to spend as little money as possible. And one good way to do that is to reduce the fees and expenses you pay.
One really good way to do this is to make sure that you pay attention to the hidden costs and fees associated with accessing your own money.
So when you think about using your own money in a foreign country, think about it with two simple goals in mind. Your first goal is to get the best exchange rate possible, so you are getting the most for your money, and the second goal to reduce the fees you are charged.
There are a lot of ways banks will try to charge you fees and here is a list that will help you avoid them.
Non Bank Usage Fee: This is the same fee you’ll pay in the US if you use an ATM that is not affiliated with your bank. However it’s usually easier to avoid this one, because your bank likely has physical locations around you. When you’re traveling abroad it’s harder to avoid this fee because most banks do not operate in foreign countries. The Capital One® 360 Checking® Account does not charge non bank usage fees and is a good choice domestically, and if that is the only fee you are concerned about abroad (but it shouldn’t be). Another fee you should try to avoid is…
ATM-operator fees Make sure the account reimburses you for fees charged by other bank’s ATMs. Usually, when you take money out of an ATM that is not associated with your bank, your bank charges you a fee, and the other bank charges you a fee too. So if you get a no-fee debit account as discussed above, you’ve gotten rid of one of the fees, but the other fee, the one charged by the third-party ATM is still there. Some banks, like Charles Schwab, will reimburse you for those fees. Schwab Bank High Yield Investor Checking® Account is the account I recommend to people who are traveling for a long time.
Look for International Partners: If your bank charges you for non bank usage fees and doesn’t reimburse for ATM-operator fees, look for a bank that is part of a global banking network. This will allow you to access your money with lower fees than out of network ATMs. Bank of America has “International ATM Partners.” You won’t be charged the non bank usage fee or the ATM operator fee if you use one of their partners, but you will still be charged a 3% fee for the money conversion by BOA.
When you take money out of an ATM, always get it in the local currency. Don’t get USD out of an ATM in Cancun. Some ATMs will offer you that option, but they will always give you a terrible exchange rate. And then when you try to use the USD with local vendors, they will again give you a crappy exchange rate, so you’re losing money twice.
Beware of Dynamic Currency Conversion/ATM-conversion fees. This sounds kind of intense, but it’s not. At ATMs that use a different currency than your local banks, many ATMs will offer to do the conversion to your home currency. But of course, the exchange rate is not as good as the rate your bank will give you. AND to make it worse, the ATM will charge you a fee (usually around 5%) on top of the shitty exchange rate for the opportunity to rip you off. If a foreign ATM “offers” to do the conversion to USD (or whatever your local currency is) find the button (they usually try to hide it) that allows you to decline, and then you can move ahead and take money out of the ATM in the local currency at your Banks’ exchange rate.
Don’t exchange money at the airport. Can you guess why? Yep, the exchange rate is not gonna be good. You’ll do better by taking money out of an ATM in the airport if you have a fee-free debit card. And I’ve never been to an airport that doesn’t have an ATM.
The Black Friday Deals on Every Long-Term Travelers WishlistForeign transaction fees: Get a credit card that doesn’t charge a foreign transaction fee. A lot of “travel cards” do not charge fees when you use them out of the country. This is usually the case for airline or hotel credit cards, and a lot of banks have specific travel credit cards. Getting one of these can make a big difference, and even if they charge you an annual fee it can be worth it if you travel internationally a lot.
Use a currency exchange app to figure out the true price of what you’re paying for things. Don’t guess how much you’re spending when you could find out for sure. Try XE Currency Converter (iOS, Google), or Globe Convert (iOS)
When using your credit/debit card to pay, only pay in the local currency. Don’t pay in your home currency. If you pay in your home currency, the exchange rate will not be good, and if your card charges you a foreign transaction fee, you are still going to get charged that fee, because even if the transaction is in your local currency, the transaction is still happening in a foreign country. The only benefit to being charged in your local currency is so that you are clear about how much you are going to be charged…but if you got the currency conversion app I mentioned above, you wouldn’t need that.
Track your spending. Yeah, we all think we have a budget while traveling. And we think we know what we’re spending daily. But most people tend to spend more cash while traveling than at home, and cash is easy to lose track of.. Try a tracking app like Toshl (iOS, Google), and if you are traveling with friends, use Splitwise (iOS, Google) to tally everybody’s spending for the group and figure out who owes what at the end of the trip. Trust me, Splitwise can save relationships when there is group spending and reimbursement. I recommend it for all trips of three people or more.
Popular Debit Cards for Travel:
USAA: USAA charges a 1% fee for foreign debit card purchases and withdrawals.
Capital One 360: Capital One 360 does not charge for using foreign ATMs, but they do not reimburse ATM operator fees (see #2 above) charged by third party ATMs.
Fidelity® Cash Management Account: Fidelity will reimburse you for ATM operator charges, but they charge a 1% fee for foreign debit card purchases and withdrawals.
Schwab Bank High Yield Investor Checking: Schwab does not charge foreign transaction fees for debit card purchases or withdrawals. They will reimburse you for unlimited ATM operator charges. Schwab will NOT reimburse you for dynamic currency conversion/ATM-conversion fees, but I already told you how to avoid those. Schwab stands out to me as the best choice, and is the one I use when I travel.
Popular Credit Cards for Travel:
American Express Platinum: The America Express Platinum card is my preferred travel card. There are no foreign transaction fees, and a number of travel related benefits like lounge access, and Gold Status at some hotel chains.
Delta SkyMiles® Gold American Express Card: I fly Delta a lot so I love having their American Express card. If Delta isn’t your jam, consider getting a card from the airline you fly the most. And if there isn’t an airline you’re loyal too, it’s time to get one.
Chase Marriott Bonvoy Card: Just like the Delta card, I use the Chase Marriott Bonvoy Card because Marriott is my preferred hotel chain. The free nights and upgrades I get from using this card regularly make it worth the fees charged.
USAA: USAA does not charge foreign transaction fees for credit cards purchases.
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