Avoiding Bank Charges Abroad

How to Avoid High Bank Charges While Using Debit and Credit Cards Overseas

Avoiding Bank Charges Abroad
May 29, 2015

International travel can be breathtaking, but do not let your heart skip a beat from realizing the amount of extra charges you are accumulating during your trip. Those costs can catch you by surprise.

For example, credit and debit cards can incur several fees when withdrawing local currency from an ATM. These include flat fees from both your bank/card issuer and the foreign bank that owns the ATM, as well as a percentage-based foreign transaction fee charged by your bank to deal with exchange rates. You could rack up 2-5% in extra expenses before you even make it to the stores.

How do you minimize these costs? We offer some tips below to minimize or eliminate charges.

  • Choose a Card With No Foreign Transaction Fees – An increasing number of cards offer no foreign transaction fees, including offerings from Capital One, Chase, and Bank of America. However, the available cards and policies change frequently, so follow up with card issuers to verify current terms and investigate alternatives.

    Review your card’s policy to verify any conditional waivers — for example, if the foreign transaction fee is waived for purchases but still applicable to ATM withdrawals.

  • Check ATM Policies and Location – Your bank or card issuer may have agreements in place with foreign banks that limits, reimburses, or eliminates ATM fees with the partner banks. It is wise to verify the locations of those ATMs. A compatible machine may be available but in a place that is far away from your area or difficult to access. Your safest bet to a functioning ATM and a decent currency conversion rate is to use ATMs at major bank locations. Avoid airport exchanges when possible.

    Consider your options and decide which of your credit or debit cards offers the best combination of low fees and accessibility at your destination.

  • Control ATM Withdrawals – Verify the ATM policies of your issuing bank and the destination bank. If you are paying a flat fee for ATM charges, then the obvious strategy is to limit the number of ATM exchanges and take as much money out as you think you will need for the majority of your trip in the beginning. Of course, you must balance the savings with the risk of carrying large amounts of cash around at your destination — which is no small concern in some areas.

    Make sure to know the daily limit on ATM withdrawals on your debit card, if any. Whether in the U.S. or abroad, it is generally better to make ATM withdrawals on a debit card instead of a credit card to avoid any potential financing charges — but if you are past your debit card limit (or worse, overdrawn on your account), you may have no choice.

  • Avoid Currency Conversion at Point of Sale – Some stores will offer you the option of registering your sale in U.S. dollars instead of the local currency. Always decline this option, known as dynamic currency conversion. The conversion rate that you receive at the merchant will generally be poorer than the one you receive from your credit or debit card issuer.

Finally, remember to verify that your card will work at your destination. Many overseas destinations have moved to chip-and-PIN technologies or EMV-enabled chip cards. If your existing cards will not work at the destination, you have a bigger problem than bank charges to deal with — especially if you only learn this after you arrive there.

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