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Have you ever come back from vacation, checked your bank accounts and credit card statements, only to cringe at how much you’ve forked over in foreign transaction and ATM fees? I mean, a $5 ATM charge here and there didn’t seem so bad when handing over your hard-earned money for that once-in-a-life-time gondola ride in Venice or that oh-so-divine meal in Paris, but man does it feel shitty to realize you’ve lost hundreds or thousands of dollars to bank fees afterwards.
Is this you? If so, you’re not alone.
One of our most frequently asked questions in our e-mail is “how do you get money out without paying fees while travelling”?
Since retiring in our 30s and travelling the world for the past 3 years, we’ve learned a lot about world-travelling–from how much it costs, to packing, to accommodations & transportation, and to travel insurance. Which is why I wrote the “Cost of Travelling the World for 1 Year” post to dispel the myth that travelling is expensive by breaking down exactly how, by living nomadically, we only spend $40K CAD (or $31K USD) /year.
Today, I’m writing part 5 of that series to show you exactly how to get money out while travelling without paying bank fees.
How Much We Saved by AVOIDING Bank fees
By not paying a 3% foreign transaction fee that most credit cards charge, and given that we use credit card around 90% of the time, we’ve saved around $36,000 x 3%= $1080/year in foreign transaction fees alone! And given that the credit card also gives us hotel points, if we add in the free hotel nights we got (like the time we stayed in a 5 star hotel in Zurich) valued at $300/night, that’s another 3 x $300= $900/year!
In addition to that, for the 9 times a month or so that we need to withdraw cash (for tipping, places that don’t accept credit cards, etc), because we use a card that doesn’t charge us a $5 ATM fee each time, we save another $5 x 9 x 12 = $540/year.
So just by getting the right credit card and bank card, we’re looking at a savings of $1080 + $900 + $540 = $2520/year. And this isn’t even including the points we’re getting for free flights through travel hacking and interest we’re getting paid on the money in that bank account.
By saving $2520 every year in bank fees means we would need $63,000 less in the portfolio to generate this passive income. So of course, that’s a no brainer right?
Of all the things you could pay for in your life, bank fees are the absolutely worst because it adds ZERO value to your life.
To avoid setting your hard earning money on fire, here are my tips on how you can save on bank fees:
When you’re travelling there are 3 “gotchas” you want to avoid like the plague:
1) Foreign Transaction Fees
2) ATM Fees
3) A Bad Exchange Rate
1) Foreign Transaction Fees:
When I’m travelling, the last thing I want to do is become a target by carrying a big wad of cash. This is why, whenever possible, I use my credit card and carry as little cash as possible. This also has the advantage of the bank reimbursing me if the card gets stolen, plus I get to earn precious hotel points or cash back on every dollar I spend. If I use cash and get robbed, I’m out of luck.
Problem is, most credit cards charge a 3% foreign transaction fee when you use your card overseas. You can see how will really add up overtime. Especially for nomadic early retirees like us, since we charge everything from accommodations, to food, to activities onto our credit card.
So how do we avoid this foreign transaction fee? Get a credit card that has 0 foreign transaction fees.
For us Canadians, the card we used was the Chase Marriott Rewards card. Not only did it have no foreign transaction fees, it also gave us points towards hotel stays.
Sadly, that card has since been discontinued. But the next best in the line is the Home Trust Preferred Card:
- $0 annual fee
- $0 foreign transaction fees
- 1% cash back
Click here to apply (full disclosure: this is NOT an affiliate link. I’m not getting paid to recommend this card. I’m telling you about it because I also applied for it and I want you to save money).
Lucky you! You have way more options than we do and way bigger sign-on bonuses too!
One of my favourite American cards with no foreign transaction fees, and comes with a 50,000 miles sign-on bonus is the Capital One Venture Rewards Card. It’s also been selected by Forbes and NerdWallet in the list of the best zero foreign transaction fee cards and “Best Flat-rate Travel Rewards card”:
Also, we currently use the Capital One 1% cash back card in Canada and love it. Never had an issues dealing with Capital One so I wouldn’t hesitate to recommend them.
- 50,000 miles sign-up bonus (a value of a free $500 in travel!) after spending $3000 in the first 3 months
- $0 foreign transaction fee
- $0 annual fee for 1st year ($95/year afterwards)
- 2X miles earned on every dollar spent
- 10 miles earned per dollar when you book on hotels.com/venture
Not being a UK citizen, I’m not as familiar with credit cards in the UK, but I did come across these handy sites which helps you find credit cards with $0 transaction fees:
Update: For UK and Eurozone readers Reader “Bruno” recommend the Revolut card.
- Free checking account (no monthly fees) with a Mastercard (simply for 6 euros for delivery)
- No fees with their Mastercard when you use it abroad
- For ATM no fees for a withdrawal under 200€ (but check that the specific country you are going to is covered)
Here’s a site recommended by the digital nomad community to help Aussies find $0 foreign transaction fee credit cards.
A note of caution on credit cards: If you have a lot of consumer debt, do not apply for more credit cards until you PAY THAT SHIT off! Read our articles about murdering your debt before proceeding. We want you to earn points responsibly and not dig yourself into a deeper hole.
2) ATM Fees:
Now, even though I’d love to use my credit card 100% of the time, some countries (like Thailand, Vietnam, Cambodia, Netherlands, and, inexplicably, Germany) just aren’t big on credit cards. Or sometimes a business will give you a 10% discount if you use cash (this was the case when we went Scuba Diving in Thailand). So in these situations, it makes sense to take out cash from an ATM.
But since ATMs charge a withdrawal fee (usually $5) + foreign transaction fees (1-3%), this could add up to hundreds or thousands of dollars a year in fees, depending on how often you travel.
This is why you should use a debit card that is part of the Global ATM Alliance.
The Global ATM Alliance is a network of banks all around the world that all agree to waive transaction fees for each other. If you have a checking account from one of the participants, you can use each other’s ATMs fee-free!
Here’s a list of them by bank name and their participating countries:
• Bank of America (United States)
• Barclays (United Kingdom, Spain, Portugal, Pakistan, Gibraltar, Ghana, Kenya, South Africa, and other countries in Africa)
• Barclays Africa Group (South Africa)
• BNP Paribas and its affiliate banks (France, Ukraine, Turkey, Poland, Morocco, Italy, New Caledonia, Réunion, Guyane, Guadeloupe, Martinique, and Luxembourg)
• Banca Nazionale del Lavoro (Italy)
• Deutsche Bank (Germany, Poland, Belgium, India, Spain, and Portugal)
• Scotiabank (Canada, Mexico, Chile, Peru, Guyana, and the Caribbean)
• Westpac (Australia, New Zealand, Fiji, and Papua New Guinea)
NOTE: Check with your bank on coverage areas. For example, if you use Scotiabank debt card in Germany you won’t have to pay a fee, but go to Slovakia, and it may not be the case)
Update: Reader “gcai” warned of ATM machines which mention “no fee charged” but uses a fixed exchange rate which causes you to haemorrhage money from a bad exchange rate. So do your due diligence and make sure you don’t get scammed.
We use our Tangerine debit card (since Scotiabank bought Tangerine) because not only do we avoid the ATMs fees while travelling abroad, we also earned 2.75% interest in our savings account!
Want free money? If you open a Tangerine account between now and October 31, 2018 using our Orange Key: 34840626S1, deposit at least $100, and you’ll get $25 as a bonus!
Free $25, 2.75% interest for 6 months as a new client if you sign up by October 31, 2018 AND no ATMs fees when you travel to Germany, France, Portugal..etc (click here for the full list of countries)! What’s not to love?
So how exactly do you get your $25 bonus?
1. Select the account type you want (Tangerine Savings Account) to open at tangerine.ca and click on ‘Enroll Now’.
2. Enter your info — this is where you enter the Orange Key (34840626S1).
3. Write your account opening cheque of $100 or more to yourself and deposit it in your account.
4. You’re done! Once your deposit shows up, you’ll receive your $25 dollars bonus within 2-3 business days.
Click here to apply for a savings account and follow the above instructions. Remember to use our “34840626S1” orange key to get $25 for free!
You guys have it made! Simply use Charles Schwab and you get no fees and all your ATM fees re-imbursed at the end of your month, no matter where you are in the world. One caveat: you need to open a high-yield checking account to qualify. But there’s no minimum deposit required and no monthly service fee.
If Your Bank Isn’t part of the Global ATM Alliance
For non-US and non-Canadian citizens, or when you go to countries that aren’t part of the Global ATM Alliance, you can still use a trick to get money out without incurring massive ATM fees.
First, make a bill payment onto a credit card with no foreign transaction fees so you’re sitting with a positive balance. Then, take your credit card into a bank branch or ATM to take out a cash advance. Because you have a positive balance, you won’t incur interest charges like you normally would for a cash advance. So you’re kinda using your credit card like a pre-paid debit card, if that makes any sense.
We had to pay a $5 cash advance service fee but we got the exact exchange rate and avoided the 3% fee (check with your bank to see how much this fee is). Since you’re paying fees per transaction, you’re gonna want to take out as much as you’re comfortable with and stashing it with your passport. This way, you’ll minimize the amount of transactions you need to do.
Bad Exchange Rates:
Another way you could haemorrhage money while travelling is bad exchange rates. Avoid exchanging money at the airport at all costs. You’ll get a really shitty deal. Whenever possible, use your credit card without foreign transaction fees. And remember, when you use credit cards, select the LOCAL currency on the pin pad, not your own currency. Otherwise it’ll bypass your credit card’s rate and use their shitty local bank’s exchange rate.
So there you have it. While travelling, make sure to use your $0 foreign transaction fee credit card as often as possible–especially since many offer a sign-on bonus, cash back, miles towards travel, or hotel points. Avoid bank exchange rates from airports and always select the local currency when you pay with your credit card. Whenever possible, use a bank card that’s part of the ATM Global Alliance to withdraw cash or Charles Schwab if you’re American. If push comes to shove, pre-pay your credit card and get a cash advance on your $0 foreign-transaction-fee credit card. This will help avoid the bank’s shitty exchange rate if you can’t find one that’s part of the Global Alliance.
What do you think? What are your tips to avoid paying bank fees?
Want free money to go travelling? Check out how we get credit card and banking sign-up bonuses here!
Want to learn how to replicate our retirement portfolio? Check out our FREE Investment Workshop!
Want to travel the world like us?
- Airbnb helped us save over $18K/year! Click here to get $40USD off your first booking.
- Click here to find out why you need travel insurance (it saved us $3000 in a family emergency!) and to get a quote.
Full disclosure: the above links are affiliate links so I may get a commission if you apply.