In the 20+ years I’ve been traveling internationally, I’d like to think I’ve learned a few things along the way. I remember backpacking through Southeast Asia with a lonely planet guide book and traveler’s checks. This past summer we took a family road trip through Iceland with google maps, mobile wifi, and a credit card. Traveling abroad has changed significantly over the years. My goal is to share with you some tips on saving time and money on your travels abroad in a three-part series.
The first part was on TSA PreCheck, Global Entry, Automated Passport Control, and Mobile Passport. The second part of this series is What’s Your Debit Card Costing You Abroad? and the third part will be on the Best Travel Credit Cards for Charlotte-based International Travelers.
This is part 2 of a 3-part series on International Travel.
What’s Your Debit Card Costing You Abroad?
International Travel is inherently expensive. Everything we do to travel abroad costs money. Passports, flights, transportation, accommodations, meals and even money itself – whether you’re withdrawing cash from an ATM or exchanging it for local currency – you’re paying to have your money. Sometimes up to 10% of whatever you withdraw and that’s before you’ve bought anything.
Consider this, if you use a major US Bank (Bank of America, Wells Fargo, BB&T or similar) ATM card at an airport in Europe to withdraw cash, you’ll pay up to $5 to the ATM owner just for using it. Then your bank will charge you up to $5 for using a non-bank ATM, and then your bank will charge you a 3% foreign exchange fee of whatever you withdraw. Let’s say you withdraw 100 Euros (let’s pretend the exchange rate is equal to the US dollar for the sake of easy math). That’s an additional $3 just to access your cash in Euros. Withdrawing $100 in euros will cost you up to $13. That’s more than a 10% fee to obtain your hard earned cash. Charlotte may be a city built on banking, but even bankers know we have to cut out the middleman.
Smart Travelers can avoid these massive fees by not using ATMs at all, but unless you’re traveling in Iceland (where credit cards are accepted everywhere), most people find they need local currency and feel safer traveling with some.
If you have a Schwab Bank High Yield Investor Checking Account Platinum Debit Card, you won’t be claiming bank robbery every time you make a withdrawal. Although you’ll pay ATM fees-say $3 when you withdraw cash-Schwab reimburses you for all those fees at the end of the month. That applies to both foreign and domestic ATMs. Whether you need cash for a scoop of mango sorbet in Venice or just need a few bucks to tip your driver in Vail, Schwab won’t charge you for doing business. Not only will you be reimbursed for ATM fees, but Schwab also won’t charge the 3% foreign exchange fee tacked on by every other major bank. Yes, you read that right. You will not be charged 3% of what you withdraw.
Other checking accounts will reimburse you for ATM fees, and don’t charge foreign transaction fees like Chase Sapphire Checking and Citigold Interesting Checking but they require minimum balances anywhere from $75K-200K. Fidelity’s Visa Gold Check Card will reimburse ATM fees if you’re a client within a certain financial standing, but it still charges a one percent foreign transaction fee. Conversely, the TD Bank Visa Debit card doesn’t charge a foreign transaction fee but does charge $3 for every non-TD Bank ATM transaction. Bank of America has a partner network that allows you to avoid fees at partner ATMs-but that requires you to spend a few hours researching and then locating those specific branches and even then you’ll still be on the hook for the 3% foreign exchange fee.
Charles Schwab does require you to open a brokerage account to obtain a high yield investor checking account – but don’t let the high yield investor name fool you. There is no minimum balance or monthly maintenance fees to open the brokerage account or the checking account. So you could easily make it your travel fund and put money in it when you’re about to head out. Or if you’re smart, you could convert it your primary checking account because instead of charging you to put your money with them through monthly maintenance fees or high minimum balances, Schwab will pay you 0.40 APY on your account balance. Sure it doesn’t seem like much, but compared to a Bank of America Checking account that pays 0.01 APY and requires a $10,000 balance to avoid monthly fees – Schwab account still comes out on top.
The Schwab Bank High Yield Investor Checking Account Platinum Debit Card will save you money anywhere in the world. It is able to avoid charging you these costly fees because it only has two brick and mortar locations in Reno, NV. Less overhead for them and more savings for you. The only downside is you aren’t able to deposit cash into your account. However, you can link another checking account to transfer money in, and you can deposit checks via the mobile app. It also comes with free standard checks and free bill pay. Like most banks, they will also do a hard credit check when opening the account.
Overall, it’s a small hurdle for a bank that not only pays me for holding my cash but gives me the freedom and convenience of accessing it anywhere in the world without charging me for it.