Avoiding bank fees while traveling while traveling is something that everyone should learn how to do. Avoiding credit card fees, currency exchange fees, and foreign transaction fees while traveling overseas is important in order to save money for more trips and adventures.
In this travel tips post we are going to cover the main fees charged by banking and credit card institutions. The fees can be broken down into three types; ATM withdrawal fees, foreign conversion fees (which can also be tied into credit card fees), and exchange rate fees.
Its quite easy to avoid paying bank fees while traveling once we understand the structure of how banks charge customers for service.
Trouble seeing the video? Watch How To Avoid Bank Fees While Traveling on YouTube.
Choosing The Right Bank
One of the first things to understand is that large public banks are in business to make a profit. Smaller banks such as credit unions generally have smaller fees but they also provide less services. It is highly recommend to look at the fee structure with your bank and also consider opening an account at a smaller bank or credit union.
Credit unions are normally “not for profit” and charge much lower fees for doing business. This means that they charge less fees while traveling. At the same time large banking institutions also have their benefits. The largest banks in the world have created partnerships with each other in order to provide no fee ATM withdrawals both domestically and internationally.
As long as one is part of these banks ATM fees can be avoided.
This assumes of course that travelers will be able to find an ATM with a bank that is part of the alliance. The alliance is called the global ATM alliance. Check the fees at your local bank and look at the viability of opening an account with a credit union. Otherwise, it is recommended to have an account at one of these major banks.
- Bank of America (United States)
- Barclays (UK, Europe, several African nations)
- BNP Paribas (France & Belgium)
- BNL d’Italia (Italy)
- Deutsche Bank (Germany, Europe, India)
- China Construction Bank (China)
- Scotiabank (Canada, Caribbean, South America)
- Westpac (Australia, New Zealand, Oceania, and Asia)
- ABSA (South Africa)
- UkrSibbank (Ukraine)
“Part of how To Avoid Bank Fees While Traveling. Carry a stash!”
Choosing a Large International Bank
Another option is to choose a banking institution that has various international entities around the world. Three of the most common are Citibank, HSBC, and Standard Charter Bank.
I have personally had a Citibank account and know many friends and families that have accounts with standard charter. I would not recommend opening an account with Citibank as their customer service is very poor and their fees are generally very high.
If opting for one of these three banks I would recommend Standard Charter Bank or HSBC.
As I have been day trading for nearly 12 years I am heavily involved in the financial markets. With the banking crises that have appeared in the last few years I looked very closely at bank financials. The last thing we want is to be part of a bank that is going to fail. Citibank was bailed out by the US government so I would not trust the decisions that they make. HSBC and Standard Chartered Bank are better options.
Recommended Option
For US residents and citizens the best option would be a checking account with Charles Schwab. Their checking account has no minimum balance requirements, no monthly fees, and all ATM fees whether international or national are refunded at the end of every month.
Charles Schwab also will open a no fee brokerage account in addition to the checking account.
I have found the checking account with Charles Schwab to be the best option. Since they refund all fees charged by any bank travelers no longer have to worry about looking for the right ATM or bank. One can choose any bank and Charles Schwab will refund all fees associated with any ATM transactions at the end of every month.
Another reason why Charles Schwab is a great option is because of very easy wiring policy. Since I run various businesses online I often have to wire money across the world. Many large banks offer international transfers via online banking but many times this isn’t enough.
Charles Schwab allows you to fax in a wire form and leave standing instructions.
This means that once the wire form is sent in and approved one would just need to call Charles Schwab and authorize a wire transfer over the phone. This has been invaluable to me as often times wire transfers can get very complicated. Definitely a recommended option for more business related travelers.
ATM Withdrawal Fees
The fees associated with international ATM transactions vary. Some banks charge as high as five dollars in order to make a withdrawal at an international ATM. This means that every single transaction, including the balance inquiries, is a charge of up to five dollars.
When living in Ethiopia I realized that I was charged over $200 one month just in ATM withdrawal fees. At that point I didn’t have the Charles Schwab checking account and was blinded by the global ATM alliance.
Sadly, there were no partnership banks in Ethiopia.
ATM fees can add up considerably even if one is just going on a two week trip to Europe. If we assume a $2-$5 fee every time we take out money that can equal upwards of $50-$200 a month.
Foreign Transaction Fees
In addition to ATM fees there are also foreign conversion fees. Any time a bank converts a foreign currency into your home currency there is a percent fee charged for that service. The total fee is between 2% to 5%.
Avoiding this bank fee while traveling is the most important. These fees can add up to much higher than the ATM withdrawal usage fees. Companies such as Visa or MasterCard normally charge 1% of the total conversion and the bank will charge between 2% to 4%.
This means there is a possibility of being charged an ATM withdrawal fee in addition to the foreign conversion fee.
Imagine taking out $500 and being charged $2.50 to use a foreign ATM in addition to a 3% fee of $15.
Both banks and credit card companies are known for charging these fees. There are many credit cards available now with no foreign conversion fees. Below are some options:
- The Chase Sapphire Preferred (My recommendation)
- Capital One® Venture® Rewards Credit Card
- Capital One® Quicksilver® Cash Rewards Credit Card
- The BankAmericard Travel Rewards® Credit Card
Other Tips On How To Avoid Bank Fees While Traveling
Use Credit Cards with Rewards – There are many credit cards available in the market that will provide benefits such as extra miles and points. Travelers are then able to use these points and miles for free trips, upgrades, and VIP style benefits.
As banks often make money on the currency exchange many of them won’t provide the exact exchange rate offered in order to make money on withdrawal. Any of the credit cards listed above would be highly recommended as they do not charge foreign transaction fees and provide these benefits for their customers who frequently travel internationally. Many credit cards will also provide the best currency exchange rates, ensuring you get more of your money for your money.
I would recommend the Chase Sapphire preferred card since it’s a points-based system that can be transferred to a variety of companies. Most travel credit cards are company specific, meaning they can only be used for one brand of hotels, airlines, or rental car companies. With the Chase Sapphire preferred card one can transfer to a variety of companies with different services.
Plan Ahead – Most travelers plan trips ahead of time. If you know you are traveling overseas start keeping track of foreign exchange rates and start exchanging early. There are a variety of tools online that one can use to gauge the rates. Here are a few below:
Many times travelers can order foreign exchange from their local bank before leaving on their trip. I always like to have roughly $100 in local currency for emergency purposes.
Avoid Horrible Exchange Rates – Never exchange any money at airports. They provide the absolute worst exchange rate available. While emergencies do happen, by planning ahead, this can always be avoided. If in a bind, your best bet is to use an ATM machine at an airport rather than the official currency exchange desks.
If currency rates spike in your favor always try to take out more money than normal. Any debit cards or ATM cards with the Visa logo will use the of official Visa conversion rate provided in the link above. Travelers you too can use the Visa conversion rate link I have listed anytime to see the official rate that visa is offering and decided for yourself to take out more money or wait until the next day as to achieve the best rate.
Planning for Contingencies
What happens if your ATM card is stolen? Then what?
It is recommended to have either two accounts or two debit cards (similar to ATM cards) just in case this happens. Banks are often able to interlink debit cards with different accounts.
I have two checking accounts with two debit cards with Charles Schwab. If one of my debit cards are stolen or is lost I will be able to immediately pick up the extra card and connect that with my second checking account.
This allows me to proceed business as normal.
Having more than one checking account with other banks is also advised. There are very rare cases where certain banks may have issues with international withdrawals. One also has to consider that some banks are more strict than others.
thanks amigo, I was actually looking into getting a better rewards card for travel, will check out that sapphire card. See you in class.
For Americans, TD Bank is also a great option for travellers. Been with them for years now and have never paid a fee of any kind. And yes, totally agree with you regarding Citibank’s horrible customer service. I have a Citi account in Australia, and while it’s quite good for travelling, the service is the worst ever!!
I’m in Canada and been with TD for over 40 years, to clarify TD charges Canadians fees on all withdrawals from International ATM.s, and that’s the same with all Canadian major banks. They’re diffferent rules for the branches of these banks when they operate outside of Canada, in essence they have to compete whereas in Canada they have a monopoly.
always good to have tips on how to save $$. my bank is Bank of America and while i find it hard to avoid ATM fees, i just try not to take out 1) too much cash 2) too many times. i have that great credit card throught BofA – the travel rewards card. i’ve been very happy with it.
I would highly recommend Lola that you choose another bank. Bank of America charges a fortune in fees for everything.
Excellent post…. I usually guess my expenses very well these days and trade for cash at a bank near me. Korea (where I live) charges very little for exchanging money (under 1% usually).
It was nice to get an uncomplicated explanation of the pitfalls of fees. I do have a question or two. First is the “chip” issue overdone for travel in Europe? The Sapphire Preferred card is a non-chip card and yet it was your ;recommended; card. I too like its flexibility of transferring points to other programs which has to be its strongest point. Probably a silly question… but when is the best time to notify your banks and card companies you will be traveling? A month ahead too early? Two weeks ahead? One week too late? I do not want to forget but I am also not confident notifications will not get ‘misplaced’ by the banks or card companies. Any idea how often they actually tag such information? Thanks
Hey Phil thanks for the note.. answers to your questions
Q1. I do have a question or two. First is the “chip” issue overdone for travel in Europe
A1. The new chip cards are for extra security. Everyone around the world still has swipe machines. The new machines are swipe and chip ready. I didn’t have any issues with I was in Italy a few months ago although a lot more places than usual take cash in Europe.
Q2. when is the best time to notify your banks and card companies you will be traveling? A month ahead too early? Two weeks ahead? One week too late?
A2. I think a day in advance or a few weeks should be fine. They place the notes on computer. One of the things I love about the Chase card is that they put it in the system and then it starts to read your behavior. Citigroup is the worst as they block your card if you use the restroom in a strange place.
Q3. Any idea how often they actually tag such information?
A2. I call give them the information after that I call back to make sure that it was actually done. Always double check because often times you will be dealing with foreigners in India/Philippines who don’t understand 100% or brand new employees that don’t know what they are doing
I am confused about Bank of America – video says it is bad and text says it is good.
Well let me put it this way Liz.. go with Bank of America if you cannot get Schwab. Since they are part of the Global ATM Alliance it will lessen your chances of being charged so much but overall I would not recommend Bank of America.
One thing I learned the hard way last year from Buenos Aires is that Americans are better off applying to open new bank accounts while in the USA.
I attempted to open a Charles Schwab account online through their website. My IP address being outside the USA must’ve caused an alert, because I was required to call them for a brief phone interview.
During that time, they asked how much time I spend per year in the USA, and when I responded less than 6 months, they said the checking account I was applying for (that reimburses foreign ATM fees) was only meant for people who are in the USA more than 6 months per year.
I said I had many friends with the same account who, like me, traveled and lived abroad most of the year, but they didn’t care. A friend later told me I should’ve lied, but I didn’t want to set up an account if they were only going to take it away from me down the line. Maybe they were bluffing about their capability to track withdrawals.
I decided not to bother, and stick with E*Trade, which only has a 1% foreign fee transaction, and which has worked at 99.9% of the ATM’s I’ve used in 30 countries since 2007.
If it ain’t broke, don’t fix it.
Good move but that 1% can definitely add up my man. Next time you’re in the US would recommend doing it in person. Only takes about 20 minutes and its all set up
Awesome blog Marcello. You seem like a real genuine dude on top of the cool insight. I’ll be checking back here often!
Thanks Paul.. appreciate that my man!
Thanks a lot for your great post and excellent advice!
I have just changed it to an account at Deutsche Bank.
And I will continue to read your posts for sure…
Although this peice does have some great general advice, and Westpac was listed in prefered banks (I’ve personally seen it in many countries outside of Aus) I feel sad when I read articals that talk about amazing credit card deals, bank’s that are travel-friendly or just generally tips for American’s that don’t extend to the rest of us.
I think American’s get a pretty good deal financially though, and all the power to them!
Charles Schwab is a Great bank! yes BANK. I opened up an investors checking account just for travel and save on the ATM fees and exchange fees. you can even open a account completely online , but keep in mind the most you can deposit online or through phone apps is $1,000 usd for the first 6 months or until the account is seasoned.
Erik
Thanks for the great tips. It’s my first email from you and it’s been very worthwhile! I have a Citibank card and while it sounds good on the surface, unfortunately we’ve had our issues. We opened the account in Australia, but we’ve had zero help from branches in Vietnam and India. Assistance can only be offered in your home country. They also have no ATMs in a lot of popular European countries which sucks for us. Having said that they do have an online chat service who have helped. For Australians looking for a credit card I highly recommend the 28 Degrees card. There are no currency conversion, ATM transaction or annual fees. And because I’ve set it up so the balance is paid each month from my Westpac account, there are no interest fees.
I wouldn’t recommend a Citibank card for anyone. I don’t like the way the Citibank does business.
Great post on something that most especially rookie travelers don’t think about. If we put some time in the beginning, it will save us in the later.
Informative and very enjoyable! One thing to mention if you address this topic again is to read the fine print carefully when considering a new credit card. I was considering the no-foreign-transaction-fee Sapphire card from Chase. Thankfully, I noticed in the fine print that the terms included their right to jack my rate up to 24.99% if I should ever be late with my payment OR if my credit score should fall for any reason. I went with a similar card from Wells Fargo instead.
Most credit cards are the same Dennis.
Great start. Great advice. My only advice is to make the videos very professional. I liked the throwing of the money but not the mistakes. Still glad I found you on the internet!!
Thanks Karen.. it was my first intent the next ones will definitely be better
Thanks for the great information…
My pleasure Roy
Awesome article… I would second the recommendation for Charles Schwab. I’ve been using them now to travel internationally for the past 4 years. I’ve been using them exclusively for my checking/ATM needs along with a no fee credit card w/ Chase. And it’s true, Schwab has literally reimbursed every last one of the fees incurred while I’ve been traveling overseas and their customer service is amazing. I got in a bind while in China trying to put down a large deposit on an apartment while teaching English there and had to make multiple deductions in a 24 hr period and they covered the $100+ in fees I racked up..Highly recommend them!
Good advice. I would add to always ask your currency exchange (Local) to do better. They will usually tighten up the spread listed on the board, especially if you frequent the same one. You will usually get better using card charges vs. cash withdrawal also.
Thank you so much for this article. It is very enlightening. I am a non us-citizen non resident in the US and read that Schwab international accepts foreigners like me and the account would come with that debit card as well. So, when you say “For US residents and citizens the best option would be a checking account with Charles Schwab”, I guess Schwab would in principle work for basically any nationality and residence. I am missing anything? Thank you.
Hi Vicente, were you able to open an account by Schwab, and is it the same conditions (no withdrawal fees) for non-US residents?