Going on a big trip outside the country this summer? You'll save money if you plan ahead to avoid hefty ATM fees.
It's common for U.S. travelers to get hit with multiple charges when using ATM machines abroad — a fee from their own bank, a fee from the foreign bank that owns the ATM and possibly a fee for currency conversion.
“You can really get sticker shock when you see those fees,” says Marybeth Bond, a National Geographic author and editor of the website GutsyTraveler.com.
You can avoid or minimize fees and keep more of your money for fun, food and souvenirs, if you follow these eight tips:
1) Plan to rely on plastic. Because carrying large amounts of cash can be risky, plastic, even with fees, is the most secure and convenient way for international travelers to replenish their cash supply. But what about traveler's checks?
“They're totally outdated,” Bond says.
Places that will cash these paper relics are few and far between and usually offer a terrible exchange rate, she says. So, Bond recommends using a debit card to withdraw cash from an ATM every few days for food and souvenirs, and using credit cards for big purchases such as hotels and plane tickets.
There are a few caveats, though. In some countries, such as Nigeria, using cards poses a big fraud risk. So, check U.S. Department of State travel information before you go. And travelers to Australia should consider using cash for purchases, as some merchants now impose a surcharge of 5 percent or more when you pay with a card, says Ed Perkins, a syndicated columnist and contributing editor for SmarterTravel.com.
“You've got to watch out for that,” he says.
2) Do your homework on fees. Before your trip, find out what fees your bank charges for international ATM withdrawals. You might have to call customer service.
“Banks don't make it easy to find this information,” Bond says.
If you find out your bank charges no ATM fee for international withdrawals and will reimburse the ones charged by foreign banks, you're in luck. Bond says that's the case with her bank, First Republic Bank, in California. Meanwhile, some banks charge as much as $5 or more per withdrawal plus a foreign transaction fee (generally a certain percentage of the amount withdrawn). Plus, you could get charged before you even get cash: Some banks charge as much as $5 for making a balance inquiry or a transfer from an ATM outside the United States.
However, some banks have agreements that allow customers to use other banks' ATMs with no fees. For example, Bank of America belongs to the Global ATM Alliance, which includes banks in France, Germany, Italy and other countries. It charges $5 for a withdrawal from a non-alliance international ATM.
Another cost to watch out for: dynamic currency conversion fees. Dynamic currency conversion allows you to have your withdrawal amount converted on the spot, so that the dollar amount (instead of the foreign currency amount) is withdrawn from your bank account. This allows you to see exactly how much money is left in your account without waiting a few days for your bank to make the conversion on its own. The exchange rates for this service are usually not in your favor, however, and some ATMs charge a fee for this service.
3) Consider opening an account with another bank. If your bank charges high fees, find a bank that doesn't and open an account just for travel. Credit unions, online banks and specialized financial institutions are more likely than large banks to offer fee-free international ATM withdrawals, Perkins says. For example, the free Charles Schwab Bank High Yield Investor Checking Account offers fee-free ATM withdrawals and rebates of ATM fees charged by foreign banks.
4) Take back-up cards with you. Your primary debit card could malfunction or just not work in a certain ATM, Bond says.
“Lots of weird things can happen,” she says.
So, carry a back-up debit card with you so you never have to use a credit card to get cash and pay sky-high cash advance fees.
“That's a no-go,” Perkins says.
5) Don't go to just any ATM. Steer clear of ATMs in grocery stores, gas stations and ultra-convenient traveler centers, Bond recommends. Perkins agrees.
“If there's an ATM in a store, it's a profit center for the merchant as well as the ATM operator,” he says.
Instead, find an ATM associated with a bank. If possible, watch someone else get money from it before you do, as scams can happen: Bond once had the first day of a trip to Greece ruined when she used an Athens ATM to get 400 euros — $600. The amount was debited from her account but no cash came out of the machine. After Bond returned home, she spent five months fighting the charge, and finally her bank agreed to cover it.
“It was a real rip-off,” she says.
6) Don't get too little cash, or too much. If your bank charges a fee for withdrawing cash from an ATM, minimize the number of withdrawals you make — but don't get so much cash that you'll be in trouble if it's lost or stolen. Bond recommends getting out at least $100 at a time.
Finally, after you get home, scour your bank and credit card statements to check for any fees that shouldn't be there, or other errors.
“Be very vigilant,” Bond says. “Look at every single charge.”