Eliminate Bank and ATM Fees while Traveling Abroad
Just a couple of days ago I was talking to a friend of mine who had been traveling through South America for the past 4 months. This friend is a little old fashioned in the way she manages her money, and instead of checking her bank statements online she simply writes all purchases and ATM withdrawals down in her checkbook. By the end of her trip she was pretty low on money, but thought she still had about $300 to get home on. She checked her online statement, just to see that this was the same amount her bank had, and was horrified to find that she was actually down to just $26 in her bank account. Had someone gotten a hold of her bank account information, and made fraudulent charges to her account? No. On closer inspection my friend found that the only person taking money out of her account was herself, and her bank. It turns out, because she was abroad, her bank had been charging her an additional $8 on every transaction made in a foreign country! $8 per transaction, which over 4 months had added up to near $300. Not what I would consider a negligible fee!
As we continue into the 21st century, most travelers would agree that international ATM’s are the best way to manage your money while abroad (in most regions of the world). They are convenient, safe, and provide travelers with the best exchange rate for their foreign currency. The only downside is the often overlooked fact that most domestic banks charge 1-3% or $1-$8 for every transaction made in a foreign country! These fees are charged to both direct purchases made to the account as well as ATM withdrawals, and can add up to a pretty hefty sum after a few months of travel.
Know your bank’s policies:
Most people have no idea what their banks charge for account transactions made on foreign soil, so the first step is to contact your bank and find out. The following chart should help you in deciding whether the fees charged by your bank are acceptable or excessive:
| 1-2% of transaction | Most common fee, should be acceptable for trips of a couple months or less |
| 3% of transaction | A high percentage charge |
| $1-$3 per transaction | These charges will add up over time. Should think about other options |
| $4+ per transaction | Excessive. Do not pay these high fees, continue reading for other bank account options to manage your money while abroad. |
Consider Opening a Secondary Bank Account to use During your Travels:
If you are not happy with the fees charged by your bank for international transactions, then I would suggest opening up a secondary checking account to use while you are on the road. A basic checking account is normally very easy to open, and you can simply close the account upon return when you’re finished with it.
The following are two great options for US and UK residents. These accounts do not charge any fees for international transactions, and the Bank of Internet account even reimburses its customers for ATM owner fees (the occasional $0.25-$1.00 charge some ATM’s charge just to use their service). Both accounts also offer respectable interest rates considering they are just basic checking accounts.
| Bank | Customers | ATM Network | Intl. Fees | Min. Deposit | Monthly Fees | Interest Rate |
| Nationwide - Flex Acct. | UK Residents | Plus | none | none. however, a monthly deposit of some amount is expected. | $0 | 0.25-4.25% APY, depending on amount of monthly deposit. |
| Bank of Internet - Freedom Checking Acct | US Residents | Plus | none, and ATM owner fees are reimbursed up to $7/month | $100 | none, unless balance falls under $1000, then a $4/month service fee is charged | 3.40% APY |
As I said above, both these accounts are really good deals, and will never charge you a cent for transactions made to your account while abroad. Please let me know if you know of any other banking options that do not charge for international transactions, especially accounts that are open to Canadian, Australian, or even better World Residents!
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I picked up a Capital One Visa credit card for my RTW trip. They have no international fee on foreign transactions. My credit card will not be my primary approach though, as ATM cash withdrawals have a heavy fee.
Instead, I’m going to open an E*Trade Money Market account with a Visa ATM card, which requires a $1,000 monthly balance to avoid a monthly fee, however there is only a 1% fee on foreign transactions (about as acceptable a rate as I can expect, not being from the UK!). E*Trade also has tight web security, which is important when banking online from public computers.
Thanks Dave. Capital One actually also has a checking account you can open that does not incur any fees on international transactions, but it is can only be opened by residents of Texas (why, I don’t know), so I didn’t include it on this list.
1% is pretty good though, I’m happy to hear you have already thought about this, it’s something a lot of people, myself included often forget about!
Fidelity just started a new program called “mySmart Cash.” They only capitalize the letters they want to, apparently.
I’m just today signing up for it because it seems to be exactly what I need for my next trip.
Here’s a cleaned-up quote off their site:
“All Fidelity ATM withdrawal fees will be waived for your account. In addition, your account will automatically be reimbursed for all ATM fees charged by other institutions while using a Fidelity Visa® Gold Check Card linked to your account at any ATM displaying the Visa®, PLUS® or STAR® logos. The reimbursement will be credited to the account the same day the ATM fee is debited from the account. Please note Visa does charge a foreign transaction fee of 1% that is not waived, which will be included in the amount charged to your account.”
Mike, thanks very much for the tip! Sounds like a good deal.
Do you happen to know if the account is open to residents outside the US?
What a great tip!
I went to Brazil for 30 days last year and was charged 3% by wells fargo to use my visa card. although I wasnt happy about it, it was only 1 month so I lived with it. Now I am heading back for 7 months and REFUSE to pay that amount. Although I love the rest of the terms, the bank of internet requires a 5k average balance to avoid fees. Any other suggestions on a bank with low/no fees to open a debit card through?
You can try Presidential bank. http://presidential.com/
We’ve been using this bank for many years. This from FAQ section:
Will I be charged ATM fees when using my Presidential Bank ATM card?
Unlike most other banks, we do not charge our customers for any ATM/Point of Sale usage. However, many ATM owners apply surcharges for using their ATMs. This surcharge will vary by ATM owner.
And for credit cards, we use CapitalOne Visa: no foreign transaction fees.
I have the Fidelity mySmart Cash Account but it never works when I am aboard. All the ATMs I tried couldn’t process the Fidelity ATM card. It is very frustrating. I ended up using my Bank of America debit card and was charged $7-10 per withdraw each time.