This post may contain affiliate links. See my policy page for more info.
Travel banking overseas can be expensive. Learn how to avoid ATM fees, get the best exchange rate, protect against fraud, and save money while traveling abroad.
Avoid International Bank Fees
The best way to obtain local currency overseas is to withdraw it from an ATM. It’s quick, easy, and you’ll get a great exchange rate. But did you know you’ll be charged $5-$7 every time you withdraw money from a different bank’s ATM?
Often both your bank and the bank that owns the ATM will charge you a fee.
When you are traveling for a long period of time, this can add up to hundreds of dollars! Let’s say you withdraw money 3 times per week while on the road (I’m not a fan of traveling with tons of cash).
This will cost you a whopping $780-$1092 after a year of travel — easily enough to continue traveling for another month.
Choose the right bank, and you will pay $0 in ATM fees from now on.
Travel Friendly Debit Card
With a Charles Schwab Investor Checking Account you’ll never have to fork over your hard earned cash to greedy bankers again. Schwab will refund all of your ATM fees, even those charged by other banks, anywhere in the world.
I’ve been using their account for a few years and absolutely love it.
This bank doesn’t play games with you like many others I’ve dealt with in the past. Customer service is great, there are no minimum balances, online banking is easy, and everything is free.
A new account with them includes a Schwab One Brokerage Account, but there are no problems (or fees) if you decide not to use it. It’s possible to set up free online transfers with other banks too.
Not From The United States?
If you don’t live in the USA, you can’t open an account with Schwab. But I know many travelers who use an HSBC Checking Account. It’s an international bank, and they have ATMs all over the world.
Unlike Schwab they will charge you a fee for using another bank’s ATM (remember the 2nd bank may also charge you).
Use 3 Accounts For Safety
International financial fraud is on the rise, and plenty of travel horror stories involve drained bank accounts. Planning for worst-case scenarios is a smart thing to do.
UPDATE: My checking account was recently drained of $680 via ATM withdrawals in South Korea while I was hitchhiking across the United States. I’ve never been to South Korea, and my card was never stolen.
That’s why I always recommend having 3 bank accounts while you travel.
#1: Personal Checking Account This account is used for personal reasons, like paying bills, and anything not travel related. It can also be used as an emergency backup should your Travel Checking Account get compromised on the road. This ATM card is locked in a hostel/hotel safe or hidden within my backpack at all times.
#2: Travel Checking Account This account is used for travel expenses, including withdrawing money out of ATMs. I never keep more than about $1000 in this account at any one time. If your ATM card details are stolen, or you happen to be the victim of an Express Kidnapping, it shouldn’t completely halt your travels. The thieves may get some money, but losses are minimized, and you’ll often be refunded by your bank soon.
#3: Savings Account An Capital One 360 Savings Account is where the bulk of my travel money resides. There are no ATM cards to steal, and my account balance earns interest. When my Travel Account gets low, I can easily go online and replenish it. This account is also linked to my Personal Checking Account, should I need to transfer funds if my Travel Account is compromised or I’m waiting for a replacement ATM card.
The redundancy built into this system keeps me prepared for many different scenarios while traveling — including bank fraud and lost or malfunctioning ATM cards.
Travel Rewards Credit Card
Another way to save money and provide some security while you travel is to carry a credit card. International exchange rates are cheapest when paying with a credit card, and it’s a great backup to have in case of an emergency.
Many cards also include basic travel, theft, and auto rental insurance.
Not to mention the possibility of snagging free flights & hotel stays with airline miles if you use your card often. Personally I use a Captial One VentureOne Card for travel, but I’m definately not a credit card expert.
To learn more about finding the perfect travel credit card, check out this great guide by Nomadic Matt.
Protect Your Cash
Cash is what I use most while traveling internationally because it’s accepted everywhere. But the problem with cash is that it’s not traceable, so if it’s stolen you’ll never see it again. Taking proper precautions when carrying cash is a must.
Many travelers hide extra cash inside money belts that are worn under their clothing, but I’ve never been a big fan. These removable pouches are uncomfortable and it’s easy to forget them somewhere.
Instead I have secret pockets sewn into my pants & shorts. They are a lot cheaper to make ($3-$7) then buying fancy travel pants with a similar feature built in.
It’s also wise to hide a stash of emergency cash in your luggage somewhere.
My favorite places include:
- Dirty Socks
- Toiletry Kits
- Under Shoe Inserts
- Sewn Behind Patch (on your bag)
In particularly risky locations, you can also carry a dummy or mugger’s wallet. This is a cheap 2nd wallet that’s filled with about $20 in local currency, an old driver’s license, some receipts, and an expired credit card. It’s used as a decoy, so if you’re ever mugged, you can throw it at the thieves and run away. Helpful against pickpockets too.
The tactic is best used in cities with high crime rates — I’ve carried one before in Guatemala City, Managua, and Tegucigalpa. Luckily I’ve never had my wallet stolen though.
Best Exchange Rates
Anytime you exchange foreign currency, you are paying a small premium to the people providing the service. How much you pay depends on the method you use to exchange it. Some are a lot cheaper than others.
Exchange with Travelers: While this is definately the cheapest way to exchange foreign currency, it’s not something you’ll be able to do all the time. Usually when leaving or entering a new country, you’ll find fellow travelers heading in the opposite direction. This is a great opportunity to trade currencies with each other. There are zero fees involved, unless one of you can’t provide exact change…
Use a Credit Card: Credit cards will give you the best exchange rates — slightly better than using an ATM. The problem is you can’t use them everywhere. Depending on where you’re traveling, many businesses only except cash.
ATM Machines: Using your debit card to withdraw cash from an ATM is the next best thing to a credit card. Exchange rates are very competitive, and ATMs are available all over the world. Insert the card from your home bank, and instantly receive local currency to use as cash. Exchanging money using an ATM is both super convenient, and relatively cheap. Plus if your bank refunds any ATM fees (like mine does) it’s the best option out there!
Currency Exchange Booth: This is one of the worst options for exchanging your money. You’ll often see these places at airports or bus terminals. They offer terrible rates, and there is always a commission of some sort tacked on. Even if their sign says “No Commissions”, the exchange rate they give is padded to make a tidy profit off your ignorance.
Money Changers: If you thought currency booths were bad, these guys can be even worse. You’ll find them hanging out around international land borders. Sometimes it’s an outright scam. Taxi drivers will take you to the country’s border, where you’ll need to get out and jump into another taxi, but this 2nd taxi won’t take the last country’s currency. If you’re not prepared, this can force you to use the local money changer who just happens to be waiting with an absolutely horrible deal. If you find yourself in this situation, make sure to count the money you receive twice, and check for counterfeit bills before you hand over your cash.
Always know the exchange rate for the country you are traveling to. Check online before you go at https://www.xe.com/ or if you use a smartphone, download this free currency exchange app: http://currencyapp.com/
Tips for Fraud Prevention
Credit & ATM card fraud is a reality. Following a few simple rules will help protect you from disaster.
Avoid Public Computers: All over the world you’ll find internet cafes where you can rent a public computer to manage your online banking. It’s relatively easy to instal a key logger on these machines, which will track every keystroke you make, giving a hacker all of your login details. If you must, make sure to use a secure password manager like Last Pass.
Call Your Bank Before You Travel: Let your bank & credit card issuer know what dates you’ll be in certain countries. This will help them identify & block any fraudulent activity on your account. It’s also important if you want your cards to work when you get there!
Keep Eyes on Your Credit Card: When paying by credit card overseas (especially at restaurants & bars), never lose sight of it. Don’t let anyone “take it out back” to swipe the card. If the machine is not near you, ask to accompany the cashier to avoid card skimming scams.
Don’t let all of this scare you too much though. International travel is a relatively safe activity, despite what you watch on the evening news. The key to having a great time is to be prepared for all of these possible scenarios. Chances are you’ll have nothing to worry about.
Stay smart, protect your hard-earned money, and travel longer. ★
Do you have any travel banking tips?