Whether you're traveling to Mexico or Australia, if you're out of the USA and plan to get cash with your ATM or use your credit card, be ready to pay some hefty bank fees unless you plan ahead. It took us awhile to figure out these money-saving tips and hopefully you'll benefit from them.
1. Exchanging currency.
In our experience, ATMs in the country you're visiting will provide about the best exchange rate there is. It's really not necessary to carry much US currency with you and traveler's checks can be cumbersome. Buying local currency before you visit provides an extremely poor exchange rate and buying from the local banks once you arrive isn't much better. Some of the worst exchange rates are at the airport at the arrival gates. If you must exchange money here for taxi fares or whatever, make it a small amount. Black market exchanges on the street are never a wise choice. We usually check with a currency converter on-line before heading ashore to get an idea of what we can expect. We hit the ATM as soon as we arrive and are always amazed to see colorful currency spewing from the cash machine. BUT...although you're getting a reasonable exchange rate, you may be paying exorbitant ATM bank fees. Read on.
2. ATM fees – getting hit from both ends
Depending on your bank, you can be assessed an ATM fee on the USA side, as well as well as another fee on the cash dispensing side. And they really add up quickly. We have a Bank of America account in the US that does not charge any fees for use of international ATMs if they are part of the Global ATM Alliance. Check with your bank to see if they have a similar arrangement. Additionally, even if YOUR bank doesn't charge, the dispensing cash machine may impose a fee...sometimes a percent of your withdrawal amount or, more frequently, a fixed fee of $5+. As if that wasn't enough, some ATMs limit the amount you can withdraw at one time to $100 - $200 and charge you another fee for each withdrawal. Bank of America's reciprocity agreement with several worldwide banks, Scotia Bank in Canada and the Carib and WestPac in the Pacific, Australia and New Zealand, for instance, have saved us a tremendous amount in bank fees.
3. Have more than one credit/debit card.
I know this sounds redundant, but we've visited some places that do not take Visa cards and others that don't take Master Card. Forget American Express and Discover unless you're in a larger metro area. By the way, look for the Visa and Master Card logos to see if they're accepted. I asked about using our Master Card in one place and they said they didn't accept it. In actuality, they did accept Master Card, but called it by another name, i.e. EuroCard.
Electronic Funds Transfer at Point of Sale. This is widely used in New Zealand and Australia and it took awhile for us to figure it out. It's a debit card, but we found it doesn't work everywhere. In Australia, for instance, unless you have an in-country bank account, the charge will often be rejected. This is unfortunate when you're trying to buy fuel at a fuel dock that is unattended. We've found that if you choose “credit card” instead of “debit card” when prompted by the machine, it will most times, accept the card and you're on your way.
5. International bank transaction fees.
This is a biggie. It can add an additional 3% to your purchases. This is the amount the credit card company tacks on as a service fee for your international transaction. This means that $1,000 you just spent for boat parts or a hotel bill is now costing you $1,030. We found that Capital One credit cards do not charge an international fee. This saves hundreds and hundreds of dollars on fees if you travel internationally pretty much all the time as we do.
6. Let the credit card company and bank know where you are.
Let your bank and credit card company know that you're traveling aboard. It saves time and embarrassment if they know you're planning to be in Australia and the international charges start coming through. Usually you'll have to update your location every 90 days or so. Who the heck travels for longer than that? Except us and other cruisers, that is?
7. Watch out for scams.
Don't let a stranger “help” you with your ATM transaction. Even if you don't know the language, you'll be able to figure it out.
Don't let strangers hover around you when you're inputting your information. We've politely asked people to step back a bit when making an ATM withdrawal.
Don't use the ATM if there's an external reader on it or anything that looks out of the ordinary. We found an ATM like this in Peru one time and a clever, helpful fellow nearby who told us this was the newest protection device for ATMs. Just slide your card through the external reader and then do it again when prompted. Really?
Got your cash? Put it away quickly and securely before leaving the ATM.