FYI: Avoiding Foreign Transaction Fees Is The Easiest Way To Stick To A Travel Budget

Unsplash/Daniel Apodaca

So here’s the deal. You can create the most ruthless travel budget and calculate your allowed daily spending down to the dime [deliciously cheap local beer] and still come home with less in your bank account than you planned. Why? Foreign transaction fees. Your bank or credit card might be tacking on an additional cost to every purchase you make overseas.

For instance, let’s say you buy a beautiful new scarf in Paris. It’s €20 and you put it on your credit card. You pay the equivalent price in USD ($24.52), but you also have to pay an extra 2 to 4 percent more in foreign transaction fees. Your scarf is now $25.50. It may not seem like a lot, but it adds up because it happens on every single purchase you make abroad.

You might decide to pay in cash instead. However, if you choose an ATM helter-skelter, you’ll likely end up paying an extra $2 to $5 for every withdrawal you make because of ATM fees. Go to an ATM more than once or twice on your trip and you’re using valuable coffee or ice cream money on banks. Yuck.

Here’s how to avoid those fees, so you can spend all of your money on exploring — and stick to your budget.

Use ATM Networks

ATMs are money-suckers. For all the money you get out of them, they take more than should be allowed just for the convenience of existing nearby when you need cash. You can always use your bank’s ATMs, but you might not find them in less-touristed destinations. However, you can work around this problem by using partner ATMs.

There are several big banks around the world that agreed to let members use each other’s ATMs without fees by creating the Global ATM Alliance. They include:

  • ABSA (South Africa)
  • Bank of America (U.S.)
  • Barclays (United Kingdom)
  • BNP Paribas (France)
  • BNL D’Italia (Italy)
  • Deutsche Bank (Germany and Spain)
  • Scotiabank (Canada, Mexico, Chile and many Caribbean countries)
  • Westpac Bank (Australia and New Zealand)

Use A Travel-Friendly Debit Card

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One traveler-favorite bank is Charles Schwab. Why? There are no foreign transaction fees and the bank reimburses travelers’ ATM fees every month. That’s right, you can use any ATM anywhere in the world and you’ll get every cent you paid in fees back at the end of the month.

Like, Charles Schwab, Capital One and Discover debit cards are free of foreign transaction fees. But if your money is with another bank, you’ll need to read the fine print in your card rules.

Know Your Credit Or Debit Card Fees

Whether you’re swiping credit or debit, your bank could charge you a fee just for being out of the country. Bank of America cancels out some of its goodwill from the ATM alliance by charging up to 3 percent in foreign transaction fees. Chase, Citibank, PNC and Wells Fargo cards have similar rates, while American Express cardholders could get up to 2.7 percent.

Not all credit cards charge the rude extra percentage on purchases while you’re abroad. Capital One, Discover and HSBC credit cards have no foreign transaction fees. Although some Chase cards have extensive fees, the Chase Sapphire Reserve and Chase Sapphire Preferred also skip the foreign transaction fees (and pack in some great travel perks). Same goes for the Citi ThankYou Premier Card and the Bank of America Premium Rewards Credit Card.

Once you’ve chosen the right card for your travels, get out there and spend your money on the trip of your dreams — without anyone charging you just for adventuring around the world.