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In an ideal world, I would use one of my no foreign transaction fee credit cards for all purchases internationally and rack up major points with spending abroad. In reality, almost all countries in the world are more cash-centric than the US so in some situations using credit cards overseas is simply not an option.
Even when the option exists to use credit cards abroad, I strongly prefer to use cash for everything but major purchases because I know most restaurants, small shops, and food stands are run as small businesses who lose out on precious margins when the credit card company is taking a cut out of the purchase.
You can greatly reduce or eliminate the fees you pay on ATM local currency cash withdrawals by carrying a good debit card. On my most recent trip through Germany, Czech Republic, Austria, and Hungary, I took out money from several ATMs scattered across the various countries and did not pay a single fee.
While many good debit options exist, I want to highlight three strong debit card options which can be useful when traveling internationally.
Bank of America Checking (member of the Global ATM Alliance)
The Global ATM Alliance is a great friend for obtaining cash abroad and avoiding those nasty ATM fees. As a Bank of America debit card holder, I have access to each of the Alliance member bank’s ATM network in the country listed below with absolutely no fees.
The following banks are members of the Global ATM Alliance.
- Bank of America (United States)
- Barclays (United Kingdom, France, Spain, Portugal, Pakistan, Gibraltar, Ghana, Kenya, and other countries in Africa)
- BNP Paribas (France)
- BNP Paribas Fortis (Belgium)
- BNL d’Italia (Italy)
- Deutsche Bank (Germany, Poland, Belgium, India, Spain and Portugal)
- China Construction Bank (China – Mainland Only)
- Scotiabank (Canada, Caribbean, Peru, Chile and Mexico)
- Westpac (Australia, New Zealand, Fiji, Vanuatu, Cook Islands, Samoa, Tonga, Papua New Guinea and Solomon Islands)
- Westpac Banking Corporation (Australia, Fiji, Cook Islands, Solomon Islands, and Vanuatu)
- Westpac New Zealand Limited (New Zealand)
- Westpac Bank – PNG – Limited (Papua New Guinea)
- Westpac Bank Samoa Limited (Samoa)
- Westpac Bank of Tonga (Tonga)
- ABSA (South Africa)
- UkrSibbank (Ukraine)
I don’t see a formal Global ATM Alliance website but wikipedia does a good a job here explaining all the terms and conditions. This is valid only for the country listed, so for instance, you would be charged no fee for using a BNP Paribas ATM in France but you would be charged for using one of their ATM’s in Denmark.
In the last few years, I can confirm using my Bank of America debit card at alliance banks in Australia (Westpac), Canada (ScotiaBank), South Africa (ABSA), Germany (Deutsche Bank), Peru (Scotiabank), and Chile (Scotiabank). When traveling with friends or family, I always offer to take out all the cash for the group so I can spare them those extra fees. Being an over-analyst, I calculated all transactions and found I was always charged the daily exchange rate and no additional fees.
There are various types of eligible Checking accounts from BOA.
Capital One 360 Checking (Formerly ING Direct Electric Orange)
- Capital One 360 Checking / Savings Account (Earn $50 through my referral link)
We have seen a positive trend lately from newly launched credit card products choosing to eliminate pesky foreign transaction fees which are generally a small percentage for using a card outside the US. The same can’t be said for debit card products.
For years I have been using a no-fee ING Direct Electric Orange checking account as my primary checking account which includes the ability to mail checks electronically and an ING Direct debit MasterCard. I don’t have the same motivation to jump around checking accounts for promotions and signup bonuses as I do with credit cards because of the higher switching costs (time!) involved. ING Direct (and now Capital One) has been good to me so I stick with them.
As part of a restructuring agreement of the Dutch financial behemoth ING Group, the company was forced to sell off ING Direct which was picked up by Capital One. One of the very first changes Capital One announced to its customers was that as of November 1st, 2012, the Capital One 360 debit card no longer charges any Foreign Transaction Fees. This used to be around 3% charge so for me this is a nice savings. The elimination of foreign transaction fees on the debit card means Capital One won’t charge a percentage of the total a customer takes out of the ATM abroad though the ATM itself may issue a surcharge which is generally a flat fee.
If you are in the market for a No Foreign Transaction Fee debit card, the 360 Checking account is currently offering a 50 USD signup bonus and my 20 USD referral link is here.
The Schwab checking account advertises unlimited fee rebates from any ATM worldwide and no foreign transaction fees. There are no minimums on the account but does require a link to a Schwab investment account which also does not currently have minimums. I am not a consumer of this product as I am the other two above so I can’t vouch for the product itself but it sounds like a great option for international travelers.
The bottom line
Credit cards are the best tool to rack up points for purchases but they often aren’t useful internationally. I think it is far more important to have a good debit card that works when traveling abroad than a no foreign transaction fee credit card.