What’s the Best Credit Card for Travelers?
It’s true. Credit cards and ATM cards have made foreign travel easier. No more carrying wads of cash around to exchange at questionable rates from even more questionable persons. And does anyone use traveler’s checks anymore? However, banking fees overseas can be rough on your travel budget. Here’s how to find the best credit card for travelers so you can avoid paying foreign transaction fees and ATM withdrawal fees while you travel.
What’s the best credit card for travelers?
Attention travelers from the United States: If you want to keep your hard-earned travel dollars in your wallet where they belong while you’re overseas, then you should be carrying credit cards and ATM cards that do NOT charge a foreign transaction fee. Sadly, avoiding those fees is a big challenge and it’s getting harder every day.
You may not even be aware of it, but virtually all banks and credit card companies charges a 1% to 3% foreign transaction fee on every single credit card purchase you make abroad.
Not only that, but when you take out cash from a foreign ATM you are almost always paying the local bank’s ATM fee AND the 1% to 3% foreign transaction fee that your home bank is charging you to access local currency. Many banks even charge you an extra flat fee of up to $5 per ATM withdrawal.
(There’s a scary list of current foreign transaction fees charged by major US banks at the end of this post.)
Let’s say you are a Chase customer and you want to withdraw the equivalent of US$300 in Euros while you’re in Italy. If you visit an out-of-network ATM (note the scary health insurance-like language) you will pay about US$10.50 in foreign transaction fees PLUS any Italian bank fees on the transaction. That means that it’s not that hard to hand over up to 5% of your total ATM transaction to the banks before it ever sees the inside of your pockets.
This is because the international credit card networks (Visa and Mastercard) charge a 1% fee to the issuing bank that you hold your account with. A few of these banks merely pass on this 1% fee to you. Many take the opportunity to tack on their own fee, increasing the percentage that you pay to 2% or even 3%. A very, very few banks not only don’t charge their own foreign transaction fee but agree to eat the credit card companies’ 1% fee as well so their customers can enjoy fee-free ATM withdrawals and credit card purchases overseas.
That’s why we opened an E*Trade Financial checking account and that’s why we carry Capital One credit cards. Capital One is the only major credit card provider that we know of that does not charge a foreign transaction fee for all customers (and we’ve done exhaustive research).
However, we just learned (the hard way) that all E*Trade ATM and debit cards now incur a 1% foreign transaction fee on purchases and ATM withdrawals outside the US because the bank has decided to stop eating the 1% fee they’re charged and pass it on to customers instead.
We just contacted Capital One, where we already have credit cards that are blissfully free of foreign transaction fees, and the company confirmed that their banking accounts are ALSO free of foreign transaction fees.
We, like you, work hard to save money for travel and we’re also careful to conserve our money once we’re on the road. That’s how we’ve kept our Trans-Americas Journey going for almost four years now. We estimate that we’ve saved nearly US$1,000 a year by religiously avoiding ATM and credit card foreign transaction fees during our Trans-Americas Journey.
We are now in the process of closing our E*Trade checking account and opening a Capital One checking account and we suggest that other travelers from the U.S. do the same.
Another thing to look for when you’re choosing a bank account that’s most suitable for overseas travel is a policy of refunding a certain amount of the ATM fees you incur from domestic or foreign banks each month. For example, Capital One will credit your account up to US$10 per month in ATM fees charged by other banks as long as the foreign bank codes the fee correctly, which most major international banks do.
Share what you know and help travelers beat the banks! The information in this post pertains to travelers with US-based banks and credit cards. Submit a comment and tell us what you know about foreign transaction fees charged to travelers from Europe or Asia or anywhere else in the world. Knowledge is power (and money) people.
| Foreign ATM transaction fees | |||
|---|---|---|---|
| Issuer | Foreign ATM cost | ||
| Bank of America | 1 percent currency conversion fee at Global ATM Alliance ATMs/$5 plus 1 percent currency conversion fee at Non-Global ATM Alliance ATMs | ||
| Capital One | No additional fees: $0 plus a 0% currency conversion fee. Refund of up to $10 per statement on ATM usage fees charged by other banks. | ||
| Chase | $3 plus 3 percent currency conversion fee; for premium accounts, $0 plus 3 percent currency conversion fee | ||
| Citi | Citibank ATMs: $0 plus a 3 percent currency conversion fee/nonCitibank ATMs: $1.50 plus a 3 percent currency conversion fee | ||
| HSBC | $1.50 for each ATM withdrawal; no fee for Premier Debit MasterCard | ||
| USAA | $0 plus 1 percent currency conversion fee | ||
| Wells Fargo | $5 withdrawal fee | ||
Source: CreditCards.com
(Visa and Mastercard) charge a 1% fee to the issuing bank that you hold your account with. A few of these banks merely pass on this 1% fee to you. Many take the opportunity to tack on their own fee, increasing the percentage that you pay to 2% or even 3%. A very, very few banks not only don’t charge their own foreign transaction fee but agree to eat the credit card companies’ 1% fee as well so their customers can enjoy fee-free ATM withdrawals and credit card purchases overseas.
That’s why we opened an E*Trade Financial checking account and that’s why we carry Capital One credit cards. Capital One is the only major credit card provider without a minimum balance requirement that we know of that does not charge a foreign transaction fee (and we’ve done exhaustive research).
However, we just learned (the hard way) that all E*Trade Financial ATM and debit cards now incur a 1% foreign transaction fee on purchases and ATM withdrawals outside the US because the bank has decided to stop eating the 1% fee they’re charged and pass it on to customers (us) instead.
We just contacted Capital One, where we already have credit cards that are blissfully free of international transaction fees, and the company confirmed that their banking accounts are ALSO free of international transaction fees. We, like you, work hard to save money for travel and we’re also careful to conserve our money once we’re on the road. That’s how we’ve kept our Trans-Americas Journey going for almost four years now. We estimate that we’ve saved nearly US$1,000 a year by religiously avoiding ATM and credit card foreign transaction fees during our Trans-Americas Journey.
That’s why we are now in the process of closing our E*Trade checking account and opening a Capital One checking account and we would suggest that other travelers from the U.S. do the same.
Another thing to look for when you’re choosing a bank and credit card that’s most suitable for overseas travel is a policy of refunding a certain amount of the ATM fees you incur from domestic or foreign banks each month. For example, Capital One will credit your account up to US$10 per month in ATM fees charged by other banks—as long as the foreign bank codes the fee correctly which most major international banks do.
In the UK, Santander’s “zero” card does not have foreign transaction fees.
Awesome! Thanks for the info.
I avoid fees like the plague, so I also carry a Capital One credit card (though I have a couple backups). I have a Fidelity ATM card and they charge no fees on foreign withdrawals.
I’ve only found one bank in Mexico that doesn’t add on fees each time though. It’s usually 25 pesos or so – $2.
Thanks, good to know about Fidelity.
Which bank in Mexico doesn’t add fees ATM fees? The rules were changes here back in May, before then the most a bank’s ATM fee could be was >8 pesos. Since then however, they’ve been able to raise fees (more in line w/ US) and we’ve found it’s generally 22-28 pesos just about everywhere. I try to use HSBC because they always code theie fee so that my bank credits it. I’ve had withdrawals at Bancomer & BBVA that didn’t get credited.
Great info! I wish I’d found a chart like that for Canadian banks, I didn’t even think of checking before I left.
CIBC did however credit me back the foreign ATM fees when I asked about them, not sure if I just got lucky that day or if it’s part of their policy. Worth checking into though.
If you are traveling in Thailand, plan for the ATM fees now charged by all banks. There is a flat fee of somewhere between 150 and 200 baht ($4.50 – $6.00 U.S). Also, if you’re using a credit card to pay at a budget hotel they’ll often try to tack on anywhere from 1-3%. To minimize these charges I budget for a week, and try and do only one ATM withdrawal. To avoid carrying around a lot of cash I pay my hotel bill at the beginning of my stay (with cash), and the other cash I put in the hotel safe. I only carry the cash that I will need for the day plus a credit card for emergencies.
Add Charles Schwab to the list. We use it while living in Thailand and fees are reimbursed at the end of the month. Best deal ever! :-)
Do you need to maintain a minimum balance in Schwab accounts for this to be applicable?
Not that we know of.
So jealous! Canada doesn’t have as many options so I use HSBC which are free internationally if you can find a branch or $3 a transaction. I always take out the maximum.
I need to double check with my Bank what the fee set up is like. I’d hate to loose a lot of money on the transfer and then converting the money. Can you deposit US dollars to a foreign bank (if you have a family member who has an account in that country) and then have them just later reimburse you? I’m thinking that might be easier if so.
More and more people really enjoy traveling to other country to unwind, distress, and refresh. Capital one has a great feature to offer and I too would not want to miss this.
Timely post as I also just realized (by examining my statement more closely) that E*Trade just started charging a 1% foreign currency transaction fee for ATM withdrawals outside of the United States. From what I can tell this started at the end of August and I called their friendly customer service to confirm what you state above.
They told me the 1% Visa charge was always there but never passed along until now, but it would have been nice if they informed people about the change in policy (kind of sneaky). That is unfortunate and puts them at a disadvantage when they have been known as the bank/brokerage with the lowest fees around. With banks hurting these days I wonder if others will start charging or raising their foreign ATM/credit card fees as well.
I hope E*Trade will read your post and reconsider or at least rebate part of the fees or put a cap on the conversion charge fees that get passed along.
Happy Traveling…
-Scott
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That is a great post for travelers not always easy to find that kind of info. I know some banks charge less to use international ATM card here in Belize than others I do not know the exact fees though.
The Capital One Card has done very well by us.
When I was traveling through London to Africa I was NOT aware that “virtually all banks and credit card companies charges a 1% to 3% foreign transaction fee” lol.
I had to learn that the hard way. 1-3% doesn’t seem like much, but it adds up and it ads up quick. Be sure to budget that into your travel expenses if this is how you plan to spend.
Thanks for this post as I am in the middle of making some serious banking changes (in preparation for lengthy travel). Just to make sure I read correctly…if I sign up for a Capital One checking account, I WON’T be charged fees for an ATM withdrawl? I am deciding between Capital One and Charles Schwab. I’ve heard good things about both but I’ve also heard that Schwab doesn’t have the best online banking system and it’s hard transfering funds into the account.
To quote the post:
From Fidelity website: “Please note there is a foreign transaction fee of one percent that is not waived, which will be included in the amount charged to your account.”
From Schwab website: “ATM fee rebates do not apply to any fees other than fees assessed for using an ATM to withdraw cash from your Schwab Bank account. Schwab Bank makes its best effort to identify those ATM fees eligible for rebate, based on information it receives from Visa and ATM operators.”
Thus – Fidelity & Schwab may refund ATM withdrawal fees but not foreign transaction fees. Capital One still remains the only one with fee-free foreign ATM use. I’d love to be proven wrong so if anyone has FIRST-HAND experience, please post.
i have never paid a foreign transaction fee at an ATM, regardless of the bank acocunt i have used. I have been paid back for every atm fee ii have ever been charged using my Schwab debit card, anywhere in the world I have used it.
As someone mentioned earlier about transferring money in and out… i havve my savings acount direcly linked to it, as standard it takes 3 days. Also, i can deposit checks via my iPhone from anywhere with ann internet connection and that usually takes about 30-40 mins to hit my account, depending time of day and day of week.
Great info. I have been looking into all this for a long time, and thought that Charles Schwab was my only option. Knowing Capital One is in there too is great to know. I got a Citi card before taking off based on some info they’d given me, and it was wrong. The amount of money charged in fees during the trip was ridiculous.
Great article, while traveling in Europe we used Capital 1 and they didn’t charge us any foreign transaction fees which was great.
However, a Word of Warning if you plan on using this card!
Transfer your Money TWO WEEKS before you will be needing it. They keep your money on hold 2 wks. after each transfer.
We got stranded in Spain w/o any cash because we didn’t read the fine print/the customer service agent failed to mention this “detail” Happy Travels!
I opened a Capital One “World” Credit Card when I was 18 for my study abroad trip. It saved me tons. Now that I live in Mexico. I have a Mexican credit card, but I still prefer to use my Capital One, no fees for purchases here and no horrible pesos-to-usd charge, I always get a really good rate. I didn’t know it was the same with the checking- will have to look into that! Thanks
Superb website…
[…]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[…]……
I have to second the Charles Schwab comment. It’s actually a better deal than Capital One because there are no minimum balances, no fees, and no limit to the number of ATM fees they’ll reimburse. Also, if you need to contact them from the road, you can call them COLLECT and they pick up the cost. We’re on an around the world drive in our VW Vanagon, and are using Schwab, and we love it.
This is such a great post, it should be categorized as travel tips/ money travel tips, a lot of money is lost in transactions
My information is a little out of date now, but I picked up a Santander Zero card in the UK which charges no fees for overseas transactions and is therefore worth its weight in gold! I’m not sure if it is still offered, but I believe there are currently other similar options out there.
It’s painful thinking about all that money you lose each time you withdraw cash. I’m from the UK and have just got myself a travel money card, which cuts down on the transaction charges and is more secure if someone steals it. As a bonus, your family can also transfer money onto it from back home. Hehe – I mean, just for emergencies, obviously!
Unfortunately it’s 10 times more difficult in Canada where we don’t have any of these options.
I have a Capital One Card that I use when I travel so I don’t have to worry about the foreign transaction fees. However, I still haven’t found a good bank for ATM. I always deal with the currency conversion fee but I try to limit it as much as possible with large withdrawals. Fortunately, I don’t do this enough to where the fees are a big deal. If I did it more often, I would definitely research ATMs more to avoid this.
Not being long term travelers, this isn’t something we’ve really had to worry about all that much. But I hate banks, and I hate giving them even a single extra dime of my money, so next time I need to use a card overseas I’ll definitely use my Capital One card. Thanks for the info!
There’s a great deal in Australia with a credit card company called 28 Degrees (part of GE Money) for a card with no annual fee, no international credit fees, no international ATM fees. What’s the catch? Dunno… I’ve been using it for over a year now and haven’t found it yet…
I definitely recommend Charles Schwab for checking! It’s easy to use and unlimited, automatic refunds of any ATM charges you incur, whether at home or abroad.
Also, I don’t think anyone mentioned the great credit card I have — Chase Sapphire Preferred. No international charges, and a great points sign up bonus!