HOW TO ACCESS YOUR MONEY
Overall, the best general strategy to get at your money is always a combination of methods and back ups (i.e. have a debit (ATM) card, credit card and some cash or even some travellers cheques – with the latter being for emergencies) and use an e-wallet where ever possible. It’s also recommended that you do not carry your card (ATM or credit) around with you at all times if you can help it. For various reasons, it’s best kept in your main bag unless you are using it.
ATMS
The best way to get money almost anywhere is out of an ATM using a debit card (MasterCard Cirrus or Visa Plus) to draw from your bank account or with a pre-loaded travel card.
This offers numerous pros such as getting the most favourable daily exchange rates, running no risk of being ripped off, having the security of a PIN code, keeping track of your rates and balance on-line and having the option to specify exactly how much money you want to change. There are even occasions where you can pull dual currencies out of machines (local and US$/EU€).
You will almost certainly find ATMs in larger cities – all over the world – that you will use as transport hubs. There are very few exceptions to this (Iran, Uzbekistan). Check ATM locations on the Visa, Amex or Mastercard website. It is worth telling your bank where you are going if exotic, depending on the bank you can get your card blocked on first/high use.
Typical Bank and Travel Card ATM Fees
ATM fees can really add up and if you are wise (being careful with the cash) you will make fewer larger transactions than many smaller ones.
Fees comprise of 4 parts:
1) the fee your bank makes – this is where you can seek out the lowest cost and find zero fee ATMs on alliances or account deals. Normally about 2% or as set amount of 5$ (normally set within a minimum and maximum)
2) the fee the withdrawing ATM makes – there is nothing you can do about this. In some countries they are zero in others a 1-2 US$.
3) the commission spread, i.e. the difference between the spot exchange rate and the exchange rate you get. So if the spread is 3% you will pay 3% over the market. Cash exchange will have a similar spread (normally higher) and travel cards have some of the lowest spreads.
4) Hidden fees. For travel cash cards these are often loading fees of 1-2% or issuing cost.
Money on Arrival
You will normally find an ATM at the airport if arriving at a major international one, but just in case you don’t or the ATM is empty, always carry some hard currency cash. The same goes for borders where there are rarely ATMs, but nearly always money changers for some ‘see-you-over’ cash until you reach a bigger city with better rates.
It’s a good idea to make sure you know what the exchange rate is before you reach a country, preventing you getting ripped off and generally letting you know how much the room you are checking into or taxi you hail is costing. This exchange rate can be found on the Internet with ease and noted before you leave. Oander.com or xe.com are great tools. It’s wise to calculate costs plus a few % to reflect normal tourist rates.
Look for the Visa Plus or Cirrus symbol you see on your card. Generally speaking ATMs work on both networks, but this is not always the case and every now and then ATMs really are everywhere in major cities and always have an English language option. Not all ATMs you find abroad can access international networks, but this varies widely from country to country. For example, in Pakistan you will find tonnes of ATMs, but only a few international ones in each big city, as opposed to India or Sri Lanka where you can’t walk 500metres in many a town centre without finding one. Therefore, if on a long trip it is handy to have (say your partner’s card or credit card) on an alternative network as a back-up. If you had to pick only one, go with Visa Plus that is more common in Latin America and West Africa. And remember when somewhere exotic never panic if your chosen ATM does not work, simply find another [bank/provider] and try again.
ATM withdrawals concerns:
Occasionally, ATMs are empty or out of order machines or many other eventualities. So common sense says don’t rely totally on your ATM card.
There are also rare cases when due to artificial exchange controls (e.g. Uzbekistan, Venezuela, Argentina or Zimbabwe pre-dollarisation) using an ATM will get you a terrible (official) rate and you need to change hard currency [on the black market]. Bring enough US$ to cover the entire stay in those countries and shop around for the best rates.
Always fully cover your PIN number when using an ATM – card skimming is a possibility anywhere.
Don’t use ATMs in weird locations. Using ATMs in hotels, hostels, local 7-11’s, or some other random place can be a bad idea. They’re convenient, but they tend to charge high ATM fees and offer horrible conversion rates. Skip those ATMs and find a major bank.
When changing money always re-count and check your money carefully.
Eliminating ATM Fees
ATMs are best way to obtain local currency overseas. It’s quick, easy, and you’ll get the best exchange rate.
But ATM fees can really add up. Often both your bank and the bank that owns the ATM will charge you a fee – usually US$5-$7 every time you withdraw money from a different bank’s ATM.. When you are traveling for a long period of time, this can add up to hundreds of dollars! Let’s say you withdraw money 2 times per week while on the road (I’m not a fan of traveling with tons of cash). That is $10 per week, $40 per month, or $520 per year – easily enough to continue traveling for another month.
Choose the right bank, and you will pay $0 in ATM fees from now on.
1. Pick a bank in the Global ATM Network. This is a network of large banks that have come together and waived fees and allow for free ATM withdrawals. While they have the highest fees ($5 USD per withdrawal) for banks outside their network, by using partner ATMs you can avoid ATM charges.
Below is a list of major banks in this alliance:
• Bank of America (United States)
• Barclays (England, Wales, Spain, Portugal, Gibraltar and certain countries in Africa)
• BNP Paribas (France, Ukraine)
• China Construction Bank (China; Bank of America card holders only.)
• Deutsche Bank (Germany, Poland, Czech Republic, Spain, Portugal and Italy)
• Banca Nazionale del Lavoro (Italy)
• Santander Serfin (Mexico; Bank of America card holders only.)
• Scotiabank (Canada, Caribbean, Peru, Chile and Mexico)
• Westpac (Australia, New Zealand, Fiji, Vanuatu, Cook Islands, Samoa, Tonga, Papua New Guinea, and Solomon Islands)
• ABSA (South Africa)
• UkrSibbank (Ukraine)
Be sure to check with your local bank on specific coverage areas. There are some exceptions i.e. if you use your Barclays card in one country, there might not be a fee but in another, there is a fee. Double check before you go! Note: Bank of America charges a 3% foreign transaction fee on all withdrawals not in USD, though in Mexico you can use Santander to avoid the fee.
2. Charles Schwab.
If you are a US resident, the best bank to use is Charles Schwab. The Charles Schwab Investor Checking Account is a high yield checking account needed to qualify, but there is no minimum deposit required and no monthly service fee. They reimburse all your ATM fees at the end of each month even those charged by other banks, anywhere in the world. Their ATM card can be used in any bank machine around the world. Customer service is great.
3. HSBC Checking Account.
HSBC is an international bank, and they have ATMs all over the world. Unlike Schwab they will charge you $2.50 USD per ATM transaction when you use a non-HSBC ATM. (the 2nd bank may also charge you). While it’s not as good as zero, it’s still better than what a lot of other banks charge.
Capital One doesn’t charge any withdrawal fees, but you do have to pay any fees charged by the local bank.
4. Royal Bank of Canada. I personally bank with RBC. They offer the RBC VIP Banking Account. For $30/month ($22.50 for seniors), I get as many ATM withdrawals anywhere in the world. It also waives all other bank fees and includes overdraft protection. I think it is a great deal. It also provides me for free the Visa Avion credit card that normally has a $120 annual fee. It earns 1 RBC Reward point for every $1 spent on purchases and 15,000 welcome points upon enrollment. Plus, I earn 25% more RBC Rewards points on eligible travel related purchases and up to 5X bonus points when shopping through the RBC Rewards eMall. Choose any airline, any flight, any time with no blackout periods or seat restrictions. If there is a seat available, you can fly, including during peak seasons. Consistent redemptions without surprises — choose air travel rewards from the Air Travel Redemption Schedule with flights starting as low as 15,000 RBC Rewards points for a short-haul flight worth up to $350. This card has a Premium and Extensive Insurance package — including trip cancellation, emergency medical and protection for your trip, hotel, rental vehicle, and purchases. It offers exclusive travel offers, as well as special deals on vacation packages, last-minute travel, cruises, tours, and car rentals
5. Ask your local bank or credit union to not charge fees. Not charging ATM fees has become a widespread practice over the last few years.
6. Some other banks that don’t charge overseas ATM fees:
In Australia Citibank visa debit Plus is the best option and Westpac let you make fee-free withdrawals from their ATM ‘alliance list’.
In Switzerland: Post Finance plus account
In the UK: Nationwide you can get free withdrawals (and travel insurance) for £10/Chf12 a month. Norwich & Peterborough Building Society has free ATM withdrawals.
It can be worth paying for such a service and it is certainly worth comparing a few commission rates and/or service fees for overseas withdrawals – it pays to shop around and check before heading off (especially if going for a while). It is always cheaper to use a debit card than a credit card to withdraw money.
CREDIT CARDS
Useful, but much more so in developed countries. The following really only applies to cards available in the United States. Canada specific cards are not discussed much. Cards in Europe tend not to have awards plans.
In less developed countries they can be used for larger purchases (e.g. a flight or Scuba course), but will normally have commission added to the total of around 2-3%. They can be used to obtain cash advances in most ATMs or banks world-wide (always with a commission of 2-3% + a service charge + you start paying the bank’s interest rate immediately) – not the best value way to obtain funds, but extremely useful to fall back on when having ATM problems.
For all uses MasterCard or Visa are the best bet; Amex will have higher percentage rates. Remember to consider your bills piling up at home with interest being charged and the fact if you are using them to draw money, it makes sense to be in credit by paying more money onto your card before leaving home, setting up a standing order or paying yourself online whilst away is prudent.
Avoiding Credit Card Transaction Fees
The next major fee we need to get rid of is the credit card foreign transaction fee. Most credit cards change a 3% fee on purchases made overseas. That can add up since most of us use our credit card for everything. The following cards have no overseas transaction fees:
Capital One No Fee Hassle Card
Chase Sapphire Preferred
Chase Ink (Business card)
United Mileage Plus
Some Discover cards
Barclays Arrivals World
Also earn points for free flights and hotels as well, but any of the cards listed won’t charge additional fees while you’re abroad.
For non-US citizens, check the following websites that list cards that might not charge an overseas fee:
http://www.creditcardfinder.com.au/travel-rewards-credit-cards (Australia)
http://uk.creditcards.com/travel.php (UK)
http://www.rewardscanada.ca/ (Canada)
For UK citizens, check out this no overseas fee card: Post Office Credit Card UK
Always pick the local currency – When you use your credit card abroad, you will often be given the option to be charged in your home currency (i.e. instead of being charged in Euros, they will charge you in US Dollars). Never say yes. The rate at which they are converting the currency is always worse than the rate your bank will give you. Pick the local currency and let your credit card company make the conversion. You’ll get a better rate.
Travel Rewards Credit Cards. Get the most out of your credit card by using it for air miles and other rewards. To learn more about finding the perfect travel credit card, check out the post Travel Credit Cards.
