Your big vacation getaway could end up costing a lot more than you imagined if you don’t pay attention to the various fees and charges that many banks are now imposing when you try to access your money while traveling overseas. It now costs more to use a credit card, debit card or ATM card while traveling. Today, most major banks are charging 2% fees or more on credit and debit card purchases made outside the US. The 2% is on top of the usual 1% currency-exchange fees already charged by Visa or MasterCard. The same goes for taking your own money out of ATMs, your bank will probably charge you from $5 to $10 every time you withdraw cash from an overseas ATM.
Because Bank of America, Bank One, Chase, and Wells Fargo all charge 2% plus the 1% for overseas foreign currency transactions, it is better to take your money out of ATMs in many foreign countries instead of using your Bank of America Visa or MasterCard for retail credit card transactions. Citibank also charges a 2% fee on overseas credit card transactions, but does not charge fees for debit use. American Express charges only the 2% fee on credit card purchases made outside the country and does not add the 1% exchange fees. Smaller banks and credit unions like Capital One and Wachovia are a better bet because many don’t charge overseas transaction fees at all.
Your destination country along with how much you intend to spend will determine how to make the most effective use of your money while traveling, but it is very important to know the total number of bank fees you are likely to have to pay. One overseas ATM transaction might combine the 1% conversion fee and the 2% foreign transaction fee with a 3% cash advance fee for a whopping total of 7% in additional fees just to withdraw money from a cash machine overseas.
Alternatively, traveling with US cash can be an advantage in certain places like Asia, parts of Latin America and the Middle East, where paying for purchases in US cash can often result in considerable discounts. Despite the risks of carrying cash, small amounts of currency can be very convenient when traveling. You can also convert your US currency into foreign money before you depart on your trip, but you might have to deal with an unfavorable exchange rate plus your own bank's commission fees.
Although American Express travelers' checks used to a convenient way to carry money when traveling, today the purchase fees plus the commissions charged by the banks to convert currency can make it a more expensive option. Perhaps the best method of handling your money while traveling is to deposit an adequate amount of money into your credit card account before you depart and then take it out of the overseas ATMs in large amounts that will only cost you a few dollars in fees for each transaction. Be sure to notify your bank if you are planning to spend a lot of money while traveling. You’ll also want to contact your credit card company and let them know that there will be large transactions in foreign currency on your card because you don’t want them putting a hold on your card thinking that it has been stolen. A little planning and research before you leave on your trip will go a long way toward making it a more pleasant and less expensive experience.
