Banking Options Abroad

Banking Options Abroad
March 29, 2016

Banking Tips for International Travel

One of the most rewarding aspects of international travel is the independence that it provides. It also affords you the opportunity to plan and regulate your own financial needs, which can be daunting in a foreign economy. What would be considered a minor financial concern in the U.S. can quickly turn into a major headache abroad. As always, you should research your destination before you leave. The following money tips and tricks provide a useful base for your banking research.

Speak to Your Bank

Many banks will freeze credit and debit cards if they suspect fraudulent activity. To prevent this, notify your bank ahead of international travel.Chip and PIN Machine with Card. Photo Credit: Clickschool, via Openclipart

  • Call your bank and let them know you'll be abroad. Include exact countries and dates, whenever possible.
  • Make photocopies of the front and back of your cards and store them in a safe place, in case of loss or theft.
  • Bring a backup credit or debit card so you can still access funds if your primary card is lost, canceled, or stolen.

Chip and PIN Cards

  • Many countries are switching from the common "swipe and sign" cards to the more secure "chip and PIN" cards. These cards, instead of using the magnetic strip, store their data on an integrated circuit "chip," which is inserted into the card machine. Instead of signing the receipt, you then type in your PIN number.

Be Aware of Fees

When using a debit or credit card abroad, two types of transaction fees generally apply. These fees are charged for the privilege of using an ATM that is not your primary bank’s, as well as for the cost of converting dollars into another currency.

  • The foreign transaction fee is a percentage of the total amount you withdraw or pay when making a purchase abroad. This fee typically ranges from one to three percent.
  • The international ATM fee is a flat fee charged for the privilege of using an ATM that does not belong to your primary bank. The average fee is $2-5 each time you use an ATM abroad.
Various Global Currencies. Photo credit: Creative Commons

Exchange Rates

Exchange rates vary country-to-country and currency-to-currency, but in every case they refer to how much local currency you can get for every U.S. dollar. Be aware of the local currency rate so you can understand the value of the purchases that you make abroad.

Tip: Before you leave, convert a small amount of U.S. dollars into the local currency of your destination country, so you have a reserve of cash for initial expenses when you arrive (food, taxis, etc.).

How to Find Exchange Rates

  • Websites such as Oanda and X-Rates offer real-time currency converters that allow you to make quick comparisons across countries. You can utilize these tools to understand how much certain amounts of U.S. dollars are worth in local currency, or vice versa.

Check Rates Periodically

  • Rates fluctuate periodically, so you may not be able to anticipate the exact amount a purchase will cost in U.S. dollars. Tools like Oanda and X-Rates, however, allow you to gain a general sense of the value of your dollar.

Relationships Between Banks

Many large banks and credit unions in the U.S. have working relationships with similar international banking organizations. Being a customer of a big financial institution may give you an advantage when traveling abroad, as many of the big U.S. banks have relationships with foreign banks, which would allow you to utilize the foreign bank’s services without fees.

International Banking Networks

  • Bank of America is a member of the Global ATM Alliance, which allows customers to use their debit and credit cards to withdraw funds from any Alliance ATM, anywhere in the world, without paying a transaction fee. You may, however, still be charged a conversion fee to convert your U.S. dollars to the local currency. Member banks include Bank of America, ScotiaBank, and Barclays, among others. The Alliance includes banks in Western Europe, Australia, China, North and South America, Asia, and Africa.
  • Citibank is another popular bank for international travelers, as they have over 45,000 ATMs in more than 30 countries. They have locations in Europe, Latin America, Asia, and Africa.

Withdrawal Tips

  • ATMs in foreign countries may only allow withdrawals from a checking account, and not from a savings account. Keep a sufficient checking account balance to ensure your banking needs will be met. In addition, ATM withdrawal limits will apply as they do in the U.S., and the amount may vary based on local currency and exchange rates.

ATMs at Night. Photo credit: John Abbate, Shutterstock

Be Wary of Fraud

A common phishing technique for criminals is to attach a fake credit card reader to an ATM. The fake machine looks and feels exactly like a normal ATM, but it records your bank information when you use it, and it exposes you to the risk of electronic theft. Be sure to stick to machines that are in well-lit, well-traveled areas, and leave if you notice anything suspicious.

ATM Alternatives

Some underdeveloped nations lack the infrastructure for reliable, easy-to-access ATMs. If you're traveling to such a destination, research and plan how you'll acquire funds necessary for your travel. Potential options include:

  • Western Union, a low-cost money-transfer service
  • Withdrawing cash prior to your trip (keeping in mind that carrying large sums of cash may make you a target for petty crime)
  • other wiring services

In addition, many nations will accept U.S. dollars as a valid currency, so be sure to research your options prior to travel.

General Tips

  • Notify your bank of any impending travel.
  • Keep up-to-date on foreign exchange rates.
  • Do not carry excessive amounts of cash.
  • Do not use a machine that looks like it has been tampered with.
  • Avoid ATMs located in dark, secluded, or dangerous areas.
  • Always be aware of your surroundings.
  • Leave if you notice anything suspicious.
  • Consider carrying a throwaway wallet containing old credit and debit cards, as well as currency that you could possibly use in the event of a mugging.

Additional Resources