If you intend on traveling overseas, you may need to pay extra fees in order to use your debit card. To avoid these fees, it’s always a good idea to check with your bank and understand what’s involved with purchases and ATM usage abroad. Even if you can’t avoid them, understanding these charges can help you minimize the fees you pay.
- What International Fees Do Banks Charge?
- How Do You Avoid International ATM Fees?
- How Do You Avoid International Transfer Fees?
What International Fees Do Banks Charge?
When traveling abroad, accessing your money can cost extra for services such as international ATM access and foreign card transactions. The foreign transaction fee is a percentage of the purchase you make at a local store or restaurant. This fee can add 1% to 3% to the total bill each time you use your debit card.
An international ATM fee is a flat fee as well as an additional percentage based on withdrawal amount. The flat fee is typically $1 to $5, even if your bank doesn’t charge you fees in the U.S. In addition, the ATM owner in the country you’re visiting may have its own separate fee, which is added to the fee charged by your bank. Depending on the bank and ATM, you may be notified of the additional fee before you confirm any withdrawal.
You could face international transfer fees even if you aren't traveling abroad. For example, transferring money with a relative overseas would require an international wire transfer. If you’re a student from abroad, your parents might need to send you money for living expenses.
An international wire is similar to an ACH transfer: in both cases, you transfer money from one bank account to another. Many major banks charge fees for sending and receiving wire transfers, so you’ll need to pay for an outgoing wire and your recipient will pay a fee on their end for an incoming wire. On average, fees for outgoing wire transfers is $45 and incoming ones are around $10.
How Do You Avoid International ATM Fees?
You can avoid international ATM fees by seeking out online-only banks, which charge fewer service fees than traditional banks. Online banks take advantage of lower operating costs in order to eliminate international ATM fees common at major national banks. Some of these banks will reimburse you for any non-network ATM fees you pay, international or domestic. Some smaller banks also enter service agreements with foreign institutions, so you may be able to save on fees by seeking out ATMs belonging to those partner institutions.
If you have accounts with a larger bank, its worldwide network of ATMs should give you better access to fee-free withdrawals—though availability and fees tend to vary by bank. If you travel often, opening a premium checking account can also result in lower ATM fees. However, such accounts generally require higher minimum balances and bigger monthly fees, making them a less optimal way to avoid international charges.
You can also avoid paying ATM withdrawal fees by using a travel-friendly credit card instead. Many credit cards don’t charge foreign transaction fees, and may also offer travel miles that help you earn points towards future travel. When using your credit card, ask the merchant to process the transaction in the local currency. This lets you avoid the typical currency conversion fee of 7% charged when credit card companies calculate conversions for you.
How Do You Avoid International Transfer Fees?
Some banks charge different fees depending on how you initiate a transfer. For example, some banks will charge you less for wire transfers ordered online. If you request the transfer in person or over the phone, you could be charged an extra service fee. You can also ask to have money transfered in U.S. dollars instead of foreign currency, as the bank may charge you more to convert money into the local currency when you receive the funds.
Some banks may charge you less per transaction if you make recurring international transfers with the same recipient or sender. You could be saving a few dollars per transfer on both incoming and outgoing wires. Ask your bank how you can set it up, either online or in person. There may also be banks that specifically cater to students from abroad. PNC Bank, for example, has an account specifically for international students. Features of this bank account include language interpretation services and one free international wire transfer per month.
Your best bet with saving money on international transfer fees may be avoiding banks completely. There are many services that allow you to send money internationally with low fees. For example, Transferwise charges a small flat fee to send money and will convert money at the exact mid-market exchange rate. Another company, OCX, doesn’t charge any transfer fees, and its exchange rate markups are usually less than 1%.