Exchange rate rip-offs, and how to avoid them

As Jay Berman and his wife were checking out of the Henley House in London last month, a clerk asked if they wanted to pay their bill in dollars. It seemed like a good idea at the time, because they’d avoid Bank of America’s three percent foreign transaction fee.

Or so they thought.

“Looking at my account a few days later, I saw I had been assessed the fee anyway,” he says. Turns out his credit card’s foreign transaction fee applied to any purchase made outside the United States, even if it’s in dollars.

“If a transaction is paid in dollars, how does it matter whether I’m in Los Angeles or London?” he wondered.

Berman, a writer based in Manhattan Beach, Calif., called Bank of America, and a representative confirmed that the $24 fee on his $822 fee was for real. Emails to the bank asking it to reconsider the fee went unanswered.

With summer in full swing, so is one of the most enduring scams in the travel world: the foreign exchange rip-off. While most of it happens quietly behind the scenes in this day of electronic transactions, some of it is not so subtle.

Consider what happened to Ken Barnes and his wife in Rome recently. They needed to change their dollars for euro.

“I asked a waiter in a restaurant where is the best place to go and he said go to Western Union,” he recalls.

So that’s where he went. He handed the teller $600, and received 349 euro.

“I looked at it, telling him that seemed like too little,” he recalls. “He said that was the amount.”

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Barnes went to another bank and asked it how much $600 would get him. It offered 550 euro.

“I immediately went back to Western Union and told the teller that this wasn’t right,” says Barnes. “He said, ‘Read the terms,’ and went to another part of the room and brought back to me a sign that said the ‘commission fee’ was 19.7 percent. This sign was not visible to me when I did the original transaction.”

Does it really cost that much to convert your greenbacks?

Western Union’s terms are clearly disclosed on its site, and it is unambiguous about its intentions. It makes money from your money.

I asked Bank of America about its foreign transaction fee. A spokeswoman said the surcharge applies to purchases made outside the U.S., whether the transaction is made in foreign currency or U.S. dollars. That’s a relief; some banks actually charge the fee even if the transaction is happening in the United States and in dollars, if you’re dealing with a non-US based company.

“The fee is applied based on increased costs associated with these types of transactions and is fairly standard in the industry,” she said in an email.

I wondered what kind of increased costs B of A, which is a company with an international presence, had to contend with. After all, no currency was actually being exchanged — the customer simply crossed an international border. So I followed up with a few questions, asking her for details on its increased costs.

I’m still waiting for a response.

Berman, the customer who had to pay the surprise fee, doesn’t have to wait for an answer. He already has one of his own: “I wonder if Bank of America is starting to see why they don’t head everyone’s popularity list.”

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(After I contacted B of A on his behalf, it responded to him in writing, reiterating that the fee was an industry standard and that he’d be charged correctly.)

Avoiding these ridiculous fees is fairly easy. Some credit cards don’t have them (B of A actually offers cards with no foreign transaction fee, as does Capital One). Many banks also have debit cards that can be used at foreign ATMs to withdraw cash without paying a hefty transaction fee.

Mostly, avoiding those currency-exchange storefronts at airports and train stations, which prey on fatigued tourists, is the best way to avoid a currency exchange rip-off when you travel abroad.

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at Read more of Christopher's articles here.

  • I’m interested in knowing what additional fees the bank incurs when foreign charges are made in USD. If none, it’s pretty sleazy to levy one on the customer.

    With this new fangled thing called the Internet, you can check currency exchange rates so easily and decide whether exchanging money at a certain location is worth it. Don’t do your homework? Get scammed. (Western Union would be the last place to do any type of non-emergency business!)

    I used a Citibank ATM card on a recent trip and they levied 3% to withdraw. But the flip side is you got a decent exchange rate. It usually worked out the same or better than the currency exchange counters and there was no waiting.

  • The “no foreign exchange fee” cards can be just as expensive to operate as any other: it’s simply a gimmick.  To understand this it’s important to understand the concept of  “loading” of the foreign exchange rates, that is, the difference between the buy and sell rates used by whoever is doing the actual exchange, a difference from which they make money.    For example, suppose you have USD $100 and convert it to Euros and get EUR 80.  If you then turned around and bought dollars with that EUR 80, you might get $94 USD in return.  That means that you’ve lost $6 or about 3% for each transaction (since I described two transactions).   That would be an acceptable/reasonable loading:  ask what your card is using if they claim to offer “no fees” for foreign transactions.  Sorry, but currency exchange isn’t free and the bank is definitely making money somewhere.

    If you go to a “Bureau de change” in a major international city, you will often see signs saying “no commissions” but they are making lots of money by altering their buy/sell rates with a large loading.  In the above example you may only get $90, $85, or even $80 back if you did that two-way exchange.  (Some more unscrupulous vendors, may charge both a hidden loading and a more obvious commission.)Usually, bank cards that charge a currency exchange fee, use a “spot rate” which is a neutral, average buy/sell rate, to convert the currency, and then charge the set commission to cover costs.  I actually consider this more honest because you know up front exactly it will cost you: there is no or minimal loading.  You can then use widely available currency services to estimate the spot rate.  However, some bank cards may use foreign exchange services that make money from both the loading AND charge a fee- that’s double dipping.  It’s hard to know if this is occurring since you rarely do transactions in both directions for an easy comparison, and the exchange rates can fluctuate wildly on one day.

    The merchants that offer to “charge you in dollars” are almost always a ripoff – not only because of the situation that Chris describes where BofA charged a foreign transaction fee anyway – but because these services use uncompetitive rates (loadings) in order to make lots of money off the exchange process.  You are almost always better off declining this service and making them charge in the local currency, letting your own bank card do the conversion.  Your bank is much more likely to use a more competitive rate.  (For the same reason, withdrawing foreign currency at an ATM uses your bank’s competitive rates and is usually much more cost effective than any other exchange method for currency/cash, especially if you withdraw enough to offset the fees.)

  • Agreed that your card with the 3% rate is reasonable.  I think the most honest, easy to use cards are the ones that have a set commission which is based on currency exchange at the spot rate (median buy/sell rate).  This means that you are likely only paying that commission and the bank isn’t making additional money off the difference between buy and sell rates.  The trick is to make sure the rate they use is actually competitive versus the spot rate, and they aren’t double-dipping.  I think you will find that currency exchange counters, even at banks, charge a minimum of 5% but up to 10% or more (when all commissions and loading are accounted for), so your ATM card at 3% cannot ever be beat. (It makes sense:  those places have to pay for their storefronts and staff somehow.)  You do need to account for any additional ATM fees, however, which may offset some of that savings for smaller transactions.  

  • As long as you are willing to do 30 seconds of reading and arithmetic (bring a calculator), you won’t get ripped off. It’s not difficult – just ask how much you will get back before you change money or what percent your card will be charged extra at. There isn’t a general rule as to which is cheaper – sometimes charging in a local currency is cheaper, sometimes charging in dollars is, and sometimes using cash from a currency exchange is so it’s important to be able to figure it out.
    If you want to change money or withdraw cash, us a local bank in the country that you are visiting – they tend to have low if any extra fees, and decent rates. And getting cash at home (for free) and then changing it at a local bank when you get there is the cheapest 90% of the time in my experience, and having some cash when you travel is always a good idea anyways.

  • backprop

    “Barnes went to another bank and asked it how much $600 would get him. It offered 550 euro.”

    Where, please?  I’m packing my bags right now.

    And also, “Should a credit card be allowed to charge a foreign transaction fee for purchases made in dollars?”

    …reminds me of a person-on-the-street column in the Onion years back: “Should banks charge for ATM withdrawals?” And one answer was: “I don’t think banks should be able to charge money for a service that they provide.”

    In other words, of course they should be able to charge. Just like you should be 100% free to take your business elsewhere. It’s not a secret.

  • john4868

    Because of my business, I literally do millions in currency transactions annually… Here are some things that we have found works for us:
    1. If you are planning a long trip overseas, investigate getting a card without a foreign transaction fee (Chase has a few). You might have to pay an annual fee but it might be cheaper in the long run. The one we use has a number of traveler friendly perks.
    2. The EU requires that merchants offer to charge your purchase in your home currency. Decline. The exchange rate is almost always really poor.
    3. If you need cash, use an ATM. Your bank will charge you a fee but it is almost always cheaper than any other exchange method.
    4. Avoid changing your money at any tourist oriented “Bureau de Change” etc. especially the ones in the airport. Most of these use PT Barnum business models. It’s like borrowing money from the guy in the back of the bar. Bank exchange rates are slightly better.

  • SoBeSparky

    What word can’t you understand, “Foreign transaction fee?”

    If it is a foreign transaction, then it is subject to a 3% fee.  This is no scam, but a well noticed fee on credit card terms and conditions.

    If you want to avoid the “foreign transaction fee” then you get certain credit cards which prominently advertise they do not charge one.  

    This is capitalism.  You have a choice.  The choice is well known.  Some charge for transactions on foreign soil, and some do not.  This has nothing to do with a bank’s cost basis.  That is a completely phony argument.  Do you say at a fast food restaurant, “Excuse me, but you just gave me a soft drink containing 99% water and charged me $2.99?  That is a scam.” You can always get plain jane tap water for free.

  • Pdoggs

    I was charged foreign transaction fees in Panama when I used my credit and debit cards.  The kicker?  Panama uses US DOLLARS as their currency. 

  • sirwired

    Another traveler hint: never let a foreign hotel/restaurant/etc. charge your account in USD.  They’ll always use a rate with some profit baked in.  No matter what your credit card company is or isn’t charging you, it’ll be cheaper than what the hotel/restaurant/etc. is offering to charge.

    Next tip: When obtaining cash in a foreign country, ALWAYS use an ATM (preferably one at a major bank.)  Again, whatever your bank is charging you, it’ll be cheaper (and, in most cases, WAAAAYYY cheaper) than a highway-robbery exchange booth or even the teller window at a bank.  I do bring a few hundred USD with me when going abroad, but I only change it if I can’t get my ATM or credit card to work.

  • SoBeSparky

    The first assertion is simply not true.  There are not two different exchange rates, one for “no-fee” cards and one for “3% fee” cards.  You do save money.  It is not a gimmick, as stated, implying loaded rates are some way to negate a waiver of the 3% fee.

    “The ‘no foreign exchange fee’ cards can be just as expensive to operate as any other: it’s simply a gimmick.”  Wrong.Why do people post things as fact without any basis in reality, mixing up the concepts of “buy” and “sell” rates with the flat 3% fee?  There is a difference between no-fee and fee cards. Three per cent, as a matter of fact.   Also, please see:

    Repeat:  none of these things are scams.  They are all clearly revealed in advertising and the cardmember agreement.  Read before you spend.

  • SoBeSparky

    Yes, you were in Panama.  You were in a foreign country.  Hence, you were charged a foreign transaction fee.  It is not called a “foreign currency transaction fee.”  

  • deemery

    Here’s something good to say about Bank of America:  If you have one of their ATM cards, in some countries you can use it at an affiliated bank’s ATM for no ATM fee, and you get the good ATM exchange rate.  You have to check the BoA Website, but if memory serves me correctly affiliated banks include NatWest in the UK, BMP Paribas in France and Deutsche Bank in Germany.  

    My USAA issued credit card does not tack on any bank-specific fees, there’s a 1% fee that MasterCard applies to all such transactions.  My UAL Chase card adds another 2% or so; that card doesn’t get used outside the US.  (But I still bring it, in case I have to show the credit card used to pay for the airline ticket in the US.)

  • Bernard Rappoport

    Even if you use an ATM, Bank of America will find a way to screw you.  My friends’ card was eaten up last year by a BoA machine in Detroit…and they refused to give it back, they simply cut it up, and a BoA Vice President, AJ Barkley, basically laughed in their face.  Even their home-issuing bank, RBC, was appalled at BoA’s attitude and lack of service.  When one arrogant bank thinks another bank is even more arrogant, that tells you why BoA is America’s most hated corporation. Plus, they KNEW their machines were screwing up…as they’ve subsequently changed their sign-in mechanisms (i.e. take card out before inputting your PIN).

  • RITom

    It may be industry practice but so are monthly service charges on checking accounts.  I opened a chase Priority club account last year that has a one year moratorium on the 3% fee; I will be closing the account when the year is up.  It worked great for me in Europe this summer.
    The US bank says it charges a 2% fee and the Europe bank that process it charges a 1% fee?  But my chase is waving it for a year, how come?  It is the same as a carry on bag fee – revenue generator.
    I have also found that the best place to convert US$ to foreign is actually at the ATM machine at the airport or train stations.   Use a major bank with a name you know (UBS,  HSBC, Barclays, Deutsche) no milk store ATM. They charge the lowest fees and the exchange rates tend to be market rates.  I was charged $4.50 in Europe for each €200 transaction which was US$250
    Why Barnes only got €550 on US$600 when he should have got € 480 in June I do not know what rates he paid? A 1.09 exchange rate has not been around in over 5 yrs based on my records.
    When the merchant offers you to pay in US$ decline because the rate is the worse compared to your credit card.
    Recently I was at the IBIS hotels and they billed my card in US$ without even asking which was at 1.34 vs. 1.25 my card was charging me. They made another €7 off of me.

  • RITom

    Panama is a foreign country? since when? They are the one of largest importer of drugs to the USA they should be a state!

  • andrelot

    I think the OP mistakenly asked for the sell rate (e.g., how many Euros would the OP have to handle the bank to get US$ 600 in hand)

  • BobChi

    Never, never use a card outside the US that charges a foreign exchange fee of any kind. This is a ripoff pure and simple. The statement that it is an industry standard is a lie, as there are quite a number of cards out there that do not steal from their customers that way. Cancel that BoA card and tell them why.

  • BobChi

    Excellent advice, all of it. Chase, CapitalOne and others offer no exchange fee cards that I use exclusively when traveling abroad.

  • BobChi

    What a stereotype! Stick to things you know about. The underlying fact is that it represents no extra costs to a bank to do a transaction in US dollars, no matter where. This is not a fee based on an expense to the bank. It is a simple ripoff fee just because they can.

  • backprop

     I agree – How dare the banks charge people for a service provided!

  • backprop

    How dare they charge for a service they provide! 

    Next, we need to make sure they don’t charge interest on unpaid balances.

  • len

    There’s a major difference between the question asked, ”
    Should a credit card be allowed to charge a foreign transaction fee for purchases made in dollars?” and the question that SHOULD have been asked, “Should a bank charge a foreign transaction fee for purchases made in dollars?”

  • SoBeSparky

    We all have our own opinions of rip-offs.  The fact is, you have a personal choice.  No one ever promised you in the Bill of Rights, “All consumers shall have their best choices already chosen for them so they cannot be ripped off.”  Read the *&@!# terms and conditions and proceed accordingly.  It is a free country.

  • SoBeSparky

    We all know that banks are only allowed to make money through fees imposed on OTHER people, not us.  

  • john4868

    I forgot one other hint…
    Make sure that you let your bank and CC companies know in advance that you are traveling overseas. Sudden overseas transactions can cause a fraud alert (even happens with our cards that are used all the time overseas)

  • Michael__K

    Just a heads up: many of the CapitalOne cards are introducing foreign transaction fees effective Aug 15 2012.  You can still get the fees waived if you hold certain types of premium accounts with them.

  • Personally, I find an ATM, withdraw cash, and try to use local currency where ever I go.  Hotels and rental cars I try to pay in advance, so to avoid problems with all that.  I know that isn’t always possible, but it helps when I can do this.  My ATM withdrawal fees at my bank are fairly low.

  • John Keahey

    With the preponderance of ATMs — in Italy they are called “Bancomats” (a local won’t understand what you mean if you ask for an ATM) — it’s crazy that travelers still exchange dollars or travelers checks at banks, or Western Union or kiosks at the airport. The ATM exchange rate is the best of all those options. All you need is a debit card and a four-digit pin. And, depending on your bank, the fee, which is small, might be waived. And don’t use a credit card in an ATM — huge interest rate, 20% or more. Debit only. My credit card only pays for hotels, perhaps a restaurant, or for a significant gift. Make sure your bank knows where and when you are traveling so it doesn’t suspect fraud when your cards are used outside of your usual area, and ask them about daily ATM limits. Plus many hotels and B&Bs will give you a discount if you pay in the local currency. It never hurts to ask.

    By the way, I don’t believe he was offered 550 euro for $600! Today, sitting in Pietrasanta, Italy, it would cost me $680 for 550 euro, the rate today is better than it has been for the past two years. The rate was probably much higher when he made his trip and it would have likely been over $700 for that many euro if it was earlier this year or sometime last year.

  • bodega3

    The traveler in Rome asked a waiter where to exhcange US currency?  Would the server at your local Dennys know the best place for a foreign visitor to do the same here?  Lesson learned by the traveler!

    Now on to the travel writer.  Guess he needs to travel more for his write offs.  What isn’t clear on his transaction?  He paid in US currency and of course there will be a transaction to pay that bill in pounds.  Duh!

  • ExplorationTravMag

    Fees are always going to be there, no matter what kind of banking you do. Banks DO incur costs when exchanging money across international borders so to say they shouldn’t charge a fee is a bit short-sighted, IMHO.

    However, banks are also predatory creatures and the trick is finding the bank with the most favorable fees.  Two years ago I went to Europe for the first time since I was a teenager.  I called bank after bank after bank looking for the best exchange rate since I knew I wanted to have Euros in my pocket before arrival.  I also talked to my bank about using my debit card overseas and was told – Use the ATM, don’t use it as a charge card and banks give better rates than anywhere else.

    This is one of those instances where the traveler really does need to do their homework before they get stuck.

  • Bill___A

    First of all, what “significant international presence” does B of A have?  Pretty much nothing in comparision with other banks in other countries (same with Chase).  Furthermore, Bank of America is terrible at accommodating people who live outside of the US (I am in a position to know this).  They can’t even get an address right.

    Secondly, it is Visa which processes the fees, so whether B of A had one overseas office or a thousand makes little difference.

    The fees are, quite simply, a rip off.   The foreign transaction fee used to be 1% several years ago.

    Dynamic currency conversion (DCC) which you relate to in this article is generally a rip off too.  Not only would they have been dinged the fee from Bank of America, but also the conversion rate used is probably less favourable.
    Western Unon makes a lot of money but they are one of the worst places to change money.  The best answer would be to use an ATM likely.  Just look at the difference between the buy and sell rates at these currency places, you’ll get the idea.

  • bodega3

    Within the last month I applied and just received my Capitol One card that has no foreign transaction fees. 

  • Bruce Burger

    I voted “yes” because I don’t think there should be laws prohibiting every odious practice. But credit card issuers should have to disclose these fees more conspicuously, and smart consumers (anyone reading your column, right?) should tell B of A to take a hike. (Capital One is the way to go if you ever leave the US.) As for Western Union, no one should change money anywhere without checking the exchange rate first. Also, it’s been decades since it’s made any sense to go to an old-fashioned money exchanger rather than an ATM in a place like Rome. Perhaps Mr. Barnes was misled by Western Union’s established name or the waiter’s recommendation, in which case this was a valuable lesson on whom (not) to trust.

  • 219kimrod

    Agree with you John. Note in Austria however the hotels must use the rate established by the central bank when offering to let you pay your bill in your home currency.  This is not true however when simply exchanging one currency for another at the hotel cashier. 

  • Bruce Burger

    How do you know this? It’s news to me, and a big change, but I can’t find any evidence on the web.

  • TiaMa

    While I do not travel extensively internationally, when I do, I do try to use my credit card as much as possible.  However, I do like to have some local currency on hand too.  My bank at home has an international currency window and I can get a number of currencies there.  I bought some British pounds to have on my trip so I wouldn’t have to deal with things like Bureau de Changes (although in the past, I would go to an American Express travel office).  What are people’s thoughts on getting some currency ahead of time – sort of “just in case?”

  • Michael__K

    In the past month, I received notices of an upcoming change in terms on my account, including a new 3% foreign transaction fee (except for PR and USVI).

    Even my local bank rep was surprised to see the notice.

  • Adam_The_Man

    20% sounds like a scam to me.  Thats just not right!

  • john4868

    Personally, I put the same amount of foriegn currency in my pocket as I do US dollars. For example, I normally carry $100 for travel in the US so I put £100 in my pocket when flying to the UK or €100 for the rest of the EU states. Between that and my CC, its normally enough to get me to an ATM.

  • Raven_Altosk

    I’m willing to bet the waiter’s brother/cousin/friend worked at that Western Union and he probably got a cut of the hefty commission.

  • Raven_Altosk

    This. And, I’ll dump all of my local currency on the hotel bill when I check out so I don’t cart it back to the States with me.

  • MarkKelling

    Depending on your bank in your home country, there are fees or an unfavorable exchange rate when you buy foreign currency.  While I agree that it is better to arrive in a foreign country with at least a small amount of cash, using the ATM at the airport provides a much better rate. I bank with Chase and there was an almost 5% difference in the rate at the ATM at London Heathrow and what the bank would charge me for cash on the same day (I was at the airport and had just gotten pounds out of the ATM and then called to get a quote from my bank branch).

  • TonyA_says

    Isn’t this a no brainer? With Capital One  Annual Fee of $59, the breakeven is about $2000. So if you plan to charge more than $2000 outside the USA in a year (or every year) get this card or something similar.

  • I think the customer would have cause for complaint if making a purchase in the U.S. in USD but was charged a foreign transaction fee, because something like that would almost certainly not be properly disclosed.

  •  Good advice. I use an ATM to withdraw cash when traveling internationally. My credit card does not charge a foreign transaction fee. They will charge a flat rate $10 cash advance fee. And the exchange rate agrees with the market rate that you can verify on the Internet.

  • MarkKelling

    My Capital One card has no annual fee and still does not charge me foreign transaction fees.  So my break even is the first charge.

  • TonyA_says

     Is that free for the 1st year only or every year?
    If every year please tell me since I want that card.

  • TonyA_says

     OK Mark I see some here

    What is the catch of the zero annual fee?

  • Jeanne_in_NE

    Thank you – was looking around after this article was posted and will stop looking at Capital One.

  • Jeanne_in_NE

    Hadn’t thought of that.  Thanks!

  • Lindabator

    Send my clients to a local foreign exchange with the best rates, and since I send them, have an agreement to waive the fees with the exception of $5.00.  That way they don’t get gouged, and they have local currency when they land, just in case.

  • Michael__K

    Just to be clear — you can still get Capital One cards  without a transaction fee.  You just need to be more careful, particularly with their debit/ATM cards, because it’s not a universal company-wide feature anymore.

  • SoBeSparky

    If you are buying on line, for example, a product from overseas, then you are charged a foreign transaction fee, even if the item is priced in $USD.  It is disclosed when you seek out and find the name and origin of the business itself.  

    So when I buy software from Germany and download it, I am charged the customary 3% fee, if applicable for that card.  

  • scapel

    I 2008 I purchased a trip out of Punta Arenas by phone using a credit card. I found out that I had paid about $180 in a foreign transaction fee. I contended that the transaction was made in US dollars, but the tranastion was made in Chile.
    The credit card company told me they had sent out a notice the previous month that they were starting foreign transaction fees. I had known they made foreign currency conversion charges Now they were adding a new charge even when the transaction was made in US dollars.
    I since have switched my credit cards to Capital One that does not make foreign transaction fees nor foreign currency conversion charges. So it is not an indrusty standard to charge foreign transaction fees.
    My travel credit card is Capital One by all means.
    I think there are other credit card banks following along here also.

  • Stephen0118

    You don’t even need to travel abroad to get charged foreign transaction fee. Just buy from any merchant located outside of the US ( and the credit card will charge you a foreign transaction fee. Even if the purchase was made from a merchant outside of the US in US dollars they’ll still charge a fee.  No win situation unless you have those credit cards Chris mentioned above.

  • I’ve had a Capital One “No Hassle Rewards” card for years.  No annual fee during any of that time, and no catches.  The interest rate is high, but I never carry a balance so it doesn’t really matter to me.

    I’ve used the card extensively overseas for the last 5 years, and I can also testify that they’ve never charged me a foreign transaction fee, and they give you whatever the spot rate is on that day.  You really do come out ahead.

  • Never, never, NEVER fall for the trick where your vendor overseas offers to ring up your purchase in USD.  One, you’re going to get screwed on the exchange rate (one hotel in India that tried this on me was using an exchange rate a good 5% worse than the spot rate).  Second, you’re still going to get whacked with a foreign transaction fee if your card charges one.  Always insist that your purchase be denominated in local currency.  Even if you have to pay the 3%, you’re still better off.

    Using ATMs and paying with cash is also good advice.  My bank (Compass) only charges a 1% fee for ATM withdrawals vs. the 3% for most credit card transactions.    

  • Pam_Traveler

    I did a lot of research on this one a few years back and I know a lot has changed, however, if you’re willing/able to travel with cash/ATM and not credit cards, I highly recommend opening a Charles Schwab Checking account. In my calculations I’ve done, they truly have NO Foreign fees at all. In our last 3 trips overseas, since 2008, I’ve used to track historical daily rates and compared them to the exchange we got at the ATM pulling our cash. Typically, Schwab is within a few pennies of the exact exchange rate. PLUS, they reimburse ALL ATM fees, domestic and foreign and do not pass on any Visa/Mastercard fee. 

    Again, it’s a checking account, so you have to have the money before your trip. I’ll typically put hotels and big meals on my British Airways/Chase card that has lower fees, but everything else is done with the ATM card and cash we’ve taken out.

    This was, by far, the best decision my husband and I made when we got married and opened our joint account. I believe Schwab’s reasoning is that they make their money on the investment side of the company (which you are not required to use) and they don’t own ATM machines, so they are able to reimburse fees on the banking side.

  • MarkKelling

    No catch as far as I can tell.  I have had the No Hassles Reward card ever since it first was offered (more than 5 years) and have never paid any kind of fee.  Of course I never carry a balance and pay in full every month.  My interest rate is only 6.5% on purchases anyway so IF I ever couldn’t pay it off, the interest won’t kill me.  Just stay away from cash advances.

    Oh, I also get 1% cash back on all purchases.

  • MarkKelling

    Cash advance?  No, never, ever, unless you need money to get out of jail!

    The interest rate on cash advances is astronomical and starts the second you get the money.

    Even if your card charged no fees to get the cash advance, the interest rate wipes out any savings over what an ATM Debit card fee would be.  After all, a Debit card pulls your money out of the bank and is not a loan so you don’t pay interest.

  • bodega3

    Jeanne, I just gotone with no foreign transaction fee, so they still offer this.  Our card arrived last week.  I had to search for the offer and there is no yearly fee.

  • bodega3

    That’s what we just got.  Got the card in the mail last week!

  • emanon256

    Thats the best idea yet!  Thanks!

  • Even if the transaction is made in the “home currency” of the credit card i.e. USD, as long there is an international transaction, the credit card issuer has to make a payment to the merchant across borders. This will require the issuer to make payment to a correspondent bank in the destination country i.e. that of the merchant, and that correspondent bank will charge a fee for handling the transaction.
    However, I am shocked to hear “some banks actually charge the fee even if the transaction is happening in the United States and in dollars, if you’re dealing with a non-US based company”. The transaction is occurring within the card’s home country and is no different than any other domestic transaction.

    Ultimately the best and simplest advice I can offer, is carry the foreign currency in cash and travellers cheques. American Express is best at this and offers its card holders reduced fee or free traveller’s cheques. Unlike the United States and Canada, TC’s are respected across the world, and in many cases, preferred. For Europe a mixture of Euros and if travelling to the UK Pounds and if Switzerland Swiss Francs.

    For most of Asia, especially South East Asia, there are many currency changers who will do it at far more competitive rates than any money changer in the US. And keep in mind, the higher the note denomination the better the exchange rate. i.e. you will get at least 1% more for a $100 bill than you will for a $20.

  • “Barnes went to another bank and asked it how much $600 would get him. It offered 550 euro.” Chris, this implies a EUR:USD exchange rate of below 1.10. The lowest I remember the Euro ever falling to, was about 1.2. Please do re-confirm the numbers.

  •  Banks generally wont return an ATM card that was eaten by the machine. Especially if its a PIN related issue.

  •  I don’t see that point especially if traveling to Western Europe.  Use a local ATM, get some money. Best exchange rate.

  • SallyLu

    If there is another bank that is not charging that fee, then why not take advantage of it?  If a person thinks it is a rip off and chooses a different bank because of it, that is capitalism.  If there are other banks that do not charge the fee, it isn’t really an industry standard right?  Believe me, I work in the financial industry and so many people don’t understand that we have to charge commission on transactions – that is how we get paid.  But if those people find another company willing to charge a lesser amount, it is their right to complain and go elsewhere. 

  • bodega3

    There is a service fee in that rate and it does vary from bank to bank and the company the ATM uses.  One traveler on a trip with friends compared her receipt to that of her friend’s for the exact same amount and they had received different amounts.   You also want to maximize those fees and not constantly use the ATM. 

    We get money exhanged ahead of time to get us through a couple of day, then we use an ATM, traveler’s checks(yes these still exist and I like having them)  and US currency that we exchange at a train station or bank.  On our last trip, the exchange at the train station was the same rate as at the banks.

  • Bill___A

    You’re right, it is called the “Global ATM Alliance”.  Good point.

  • bayareascott

    Banks still hit you up for exchange fees.  If you can get a good exchange rate at a bank, then exchanging cash is just fine AND you know what rate you are getting.

  • bayareascott

    Are you saying you got a better rate from the ATM at the airport then you would have if you had gone to the bank after you arrived?

  • BMG4ME

    I have a Citibank card that does not charge transactions fees – I almost accepted the offer to have it billed in dollars then realized it would be more expensive.  Glad to see I was right to do so.

  • IGoEverywhere

    This is between the credid card and the customer. Berman should have been competent enought to contact his credit card company to find out their rules before he left. A legitimate travel agent would have told him that.

  • davork

    Not Natwest, but Barclays


    Click on International locations and see:

    BNP Paribas (France)BNL Banca Nazionale Del Lavoro (Italy)Barclays (England, Scotland, Wales, Northern Ireland and the Channel Islands)Deutsche Bank (Germany)Scotiabank
    (Canada and the Caribbean, Caribbean countries include: Anguilla,
    Antigua & Barbuda, Bahamas, Barbados, British Virgin Islands, Cayman
    Islands, Dominica, Dominican Republic, Grenada, Jamaica, Netherlands
    Antilles (St Maarten), St Kitts-Nevis, St. Lucia, St. Vincent & The
    Grenadines, Trinidad & Tobago, Turks & Caicos Islands, US Virgin
    Islands)Westpac (Australia and New Zealand)

  • traveler

    If that 550 euros for $600 (US) was recent – that was literally a steal!

    I rented a car from Avis in Vienna, Austria (not at the airport), brought it back in 13 days, 23 hours (short the full 14 days by one hour), full tank of gas and just washed and vacuumed. I had a written contract that was not honored- instead I was charged almost double. I spent the next several weeks fighting this both with Avis (the company headquartered in the US does not control their affiliates ourside of the US ), contacted my Mastercard about this fraud. Finally, the good people at Avis in Vienna conceeded that all I owed was the original 530 euros that the contract stated BUT when they put the “currency conversion” rate thru – my credit card was charge over $1000. And this was at a time when the conversion was one euro to $1.25US.

  • Liz M

    This is where I get frustrated. In the last few months BoA have started charging the 3% fee for these banks as well. I have lived in the UK for 6 1/2 years and would have never gotten hit with a fee for pulling out of Barclays. I fully expect a fee to be charged if we use our card in a restuarant, shop, or some other bank’s ATM but not one under their alliance. We did our homework when we moved over here and that was the best deal, exchange rate is always current so no excess there. But now we’ve been left in the lurch by BoA and will be moving to Capitol One. I still have some research to do but it seems the 360 is a good deal. Bottom line-don’t take BoA out of the country ever again!!

  • deemery

    WHILE we were in Italy in November, the BOA policy changed! When I got home, I noticed the 3% fee was assessed on some of my transactions. I called and complained, and pointed out their updated website says “a 3% fee _may_ be charged” (my emphasis.) They backed out the fees.

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