18 Sep Travel Banking in 2020: Watch Out For These 3 Things
Travel Banking in 2020
Watch out for the triple threat of travel banking; ATM fees, conversion fees, and online banking.
One of the easiest things to do while traveling abroad is to spend all of your hard-earned money. Nobody wants to spend their play money on fees and other transactions. You would be surprised by how much money can be spent simply between the withdrawal of money from foreign ATMs, the cost of foreign transactions, currency conversions fees’ amongst other things. This will allow you to make a better decision when deciding which bank to use for your international endeavors considering each bank has its own fees and policies for foreign transactions. Below you will find valuable information for travel banking in the upcoming year.
ATM Fees
No matter where you are in the world, ATM fees are hated. You can not imagine anything worse than having to pay to access your own money. However, depending on your bank’s policies you may not be only paying to access your own money once, but TWICE. Chase, Wells Fargo, and Bank of America charge a $5 fee PLUS a 3% fee on the amount that you are taking out. This is in addition to the fee that the foreign ATM company charges.
For example, if your intention is to take out $100 worth of a foreign currency lets use the cash-heavy culture of the Vietnam Dong as an example. The ATM may be charging you 50,000 DNG ($2 USD fee), in addition to that your bank will charge you $5 fee for using your US-based card in a foreign ATM, and then charge you a 3% fee ($3) for the conversion rate from USD to DNG. In a moment’s transaction, you just totaled $10 in fees. That means the $100 withdrawal just became $110 transaction. That’s a 10% increase!
If you were to do this same transaction 10 times on your trip you just spent $100 on fees alone which is the total of the money you originally took out! This is if you are working smart by doing large transactions at a time instead of smaller on the need to need basis. If this were to be done on a quick $40 withdrawal which can go a long way in Vietnam that you are now paying an additional 20% of your original withdrawal amount! $40 + $2 foreign ATM fee + $5 bank fee + $1.20 (3% Conversion fee) = $48.20! Imagine this multiple times over an entire vacation!
Conversion Fees
When you are traveling in an area that allows for debit/credit card transactions you have to be aware that you may be paying an additional fee each and every time you swipe. Depending on your companies policies which may or may not differ from their ATM policies you may incur multiple fees.
Citibank, for example, charges an industry-standard 3% fee on foreign transactions. Let say over a period of a week you swiped your card 5 times for the following various amounts; $20, $12, $36, $15, $62. In total, you spent $145. However, each of those individual swipes a 3% charge was tacted on. The $20 became 20.60, the $62 charge became $63.86 and etc… In total, you just spent $4.35 for simply the art of swiping plastic. Sure, this seems like a minimal amount for the luxury of going cashless but imagine how many times a day we swipe our cards and how fast that could add up.
Online Banking
One of the beautiful things about modern banking is the ability to never step foot inside of a physical building for all our banking needs. This saves you the trouble of last-minute running around that a trip allows has. This cuts the overhead cost of the bank allowing for them to cut back their fees for us, the consumers. This is a great place to look at establishing an account for travel. Many of these online banking accounts do not charge for foreign ATM transactions or currency conversions. Below are two examples of great and simple accounts for travel banking. However, it is important to keep in mind that it does take about a week or so transfer the initial money into the account and to receive the debit card.
Our Recommendations:
Overview:
- $0 to keep or open the account
- $0 or % additional fee for ATM transactions (does not include the ATM’s fee)
- Mastercard (some places may or may not accept Mastercard)
- 0.20 % interest which is a HUGE increase from the industry standard of 0.01%
“For 360 products (360 Checking, Money, etc.) there are no additional fees when you use your debit card abroad (any transaction made in a foreign currency or that MasterCard® classifies as a cross-border transaction).
Schwab Bank High Yield Investor Checking Account
Overview:
- Unlimited ATM fee rebates worldwide, they will refund the fee the ATM charges you at the end of the year.
- $0 minimum account balance so long as it is linked to a Schwab One Brokerage account
- 0.31% interest surpassing 360’s already high interest rate
With this account, Charles Schwab Bank doesn’t charge you to use an ATM, even ones in foreign countries. The bank refunds all ATM-operator fees at the end of each month.
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