Financial Matters

Using ATM’s abroad

Ah, yes…the joys of a new country. The sights, smells, and tastes of a foreign land beckons. You visit that quaint corner café, order a French latte, and sit back. After pondering the philosophical questions of the world, you realize it’s time to pay the bill.

Your hand reaches in your pocket, and…nothing! Oh, no! A victim of pickpocketing? Not so fast, pal…more likely, you just spent your last euro cent on that exotic…McDonalds vanilla cone…with sprinkles.

Yes, a fact of life is that, at some point during your travels abroad, it is likely that you will need some cash. Unless you want to be walking around carrying around wads of 100’s, your best bet will be doing what the rest of the civilized world does… withdrawing from ATMs.

Sounds great, right? Just use your current bank’s ATM card, and voila! Local currency on demand! Just one problem– try digesting your current bank’s fee schedule—foreign transaction fees, surcharges for using unaffiliated ATM’s, using the card on the third Saturday of the month while wearing a clown outfit fees—you get the picture. Some banks charge a flat fee, others tack on a percentage of your transaction.

A better option

Because it costs them less to administer, many banks offer attractive options for online bank accounts—high rates, easy access via ATMs and money transfers, and no fees. Nowadays, it’s easy to be up and running with a new online bank account-you can still keep your regular account, and easily transfer money between accounts. The savings on fees can really add up, making it a no-brainer to put in the miniscule effort required to open one. Of course, you should avoid keeping your dollars with gimme-your-money-i-promise-ill-keepitsafe.com. There are a number of reputable international banks that will give you good bang for your foreign buck.

The most straight forward option is getting an account that charges no fees for foreign transactions. Just use the card as you would any other ATM. You withdraw in the local currency, and your statement will show the transaction in dollars—with no fees built in from your home bank. Plus, the actual exchange rate will likely be the best you can find—since banks get a wholesale rate, known as the interbank rate, which they can pass along to consumers. Keep in mind, however, that the bank that operates the ATM may still charge you a fee—unfortunately, this is out of the control of your U.S based bank. Nevertheless, you’ll still be better off doing that versus changing cash or getting a double hit on the fees—both from your bank and the ATM. CapitalOne offers an online money market account with no foreign transaction fees, no minimum balance, and a great rate. Plus, you can opt for a rewards account, which gives you points towards airline tickets.

So, what exactly is a money market account? It’s just like a savings account, except it pays a higher interest rate. How do they do that? By placing certain limits on withdrawls. Ah, the fine print. But, it’s not as bad as you think. Most online accounts nowadays place restrictions on withdrawls through checks and online transfers, but let you withdraw from the ATM as many times as you like. For Capital One, you can take out up to $500/day. Of course, for anything more than that, its wise to use a no foreign transaction fee credit card like this one.

So, be prepared for your trip abroad—with the right ATM card in your wallet! And reward yourself with an extra latte for all the money you saved!

Salud!

Click here to apply for CapitalOne’s Direct Money Market Account

Related posts:
Money matters abroad