Overseas ATM fees are no fun. When using your bank card abroad to take out money, you may incur two transactions fees, one from the foreign bank and another from your home bank. Also, a weak dollar translates to more pain in foreign ATM fees.
Using your credit card abroad only to be hit with a foreign transaction fee is no pleasure, either. Many credit card companies will charge a transaction fee of 3-5% on all foreign purchases. Also, foreign retailers may charge you a conversion fee should you elect to charge your purchase in U.S. dollars versus the local currency.
Here are a few options to help eliminate transaction fees when traveling outside the U.S.
Charles Schwab Platinum Visa Debit Card
By opening up a checking account with C. Schwab, you’ll receive a debit VISA card that you can use domestically and overseas. More importantly, Schwab will reimburse you for any ATM fees you incur worldwide. Each month Schwab reviews your account for AMT fees. Your account will automatically be credited for any ATM fees you incurred worldwide. However, the reimbursement doesn’t include fees on cash advances.
Schwab customer service recommends that you save your ATM withdrawal receipts. Sometimes banks do no separately list the withdrawal amount and the ATM fee. In such cases, your account may not get reimbursed for the ATM fee. So make sure to review your statement each month against your receipts. If you find an ATM fee that was not reimbursed, simply call Schwab customer service. There is no maximum amount for reimbursement of fees.
Your Schwab Platinum bank card can also be used for purchases at retail stores abroad. You will not incur a foreign transaction fee when using your Schwab debit card for overseas purchases. This is a significant benefit, as most banks charge a transaction fee of 3-5% on foreign purchases.
You can open up a Schwab checking account by visiting their website. To open the checking account, you will be required to also open a brokerage account. However, there is no annual fee for the checking account or the brokerage account. You are also not required to make a minimum number of trades per year with your brokerage account. There is also no required minimum balance for the checking account or the brokerage account.
As with other checking accounts, the interest rate for a Schwab account is abysmally low, a fraction of 1%. But most people don’t open checking accounts as a means to make their money grow.
Keep in mind that Schwab bank is an online bank, and does not operate any brick and mortar branches.
Capital One VentureOne Rewards Visa Credit Card
Capital One will not charge you a foreign transaction fee when using their Venture credit card for overseas purchases. This is a significant benefit, as many other banks charge a transaction fee of 3-5% on overseas purchases. Also, there is no annual fee for this card, and you can apply online.
This card does have a rewards program. However, I find the rewards program to be weak. For each dollar you spend, you receive 1.25 miles, which you can think of as rewards points or cash back. That’s a return of only 1.25% on purchases. You can get a higher cash back percentage on other cards.
To purchase anything with your miles, you will need 100 miles for every dollar of whatever it is you want to buy. For example, a plane ticket for $250 requires 25,000 miles. To acquire those 25,000 points, you will have had to charge $20,000 to your card. So spending $20,000 gives you a reward of $250. As mentioned previously, that equates to earning 1.25% for every dollar spent.
Miles can be used for many things, such as car rental, airline tickets, hotel rooms, or to receive cash back. Miles never expire, and there is no upper limit to miles accrued in any given year.
If you charge $1,000 during the first three months you have this card, you’ll receive 10,000 bonus miles. That’s 10 miles per dollar, which is a pretty nice bonus.
I use this card, but for foreign transactions. For domestic purchases, I use a Chase Freedom Visa credit card which offers a higher cash back rewards program.
This card is gold in color, and should not be confused with the blue-colored Capital One Venture Visa Credit Card, which I explain below.
Capital One Venture Rewards Visa Credit Card
The difference between this card and the VentureOne card is the rewards program and the inclusion of an annual fee. For every dollar you spend, you receive 2 miles, which you can think of as rewards points or cash back. So that’s a return of 2% on purchases compared to only 1.25% for the VentureOne card.
During your first year, you will not be charged an annual fee for the Venture Rewards card. For every year after the first year, you’ll be charged a $59 annual fee. There is no way to waive this fee.
The other benefits for this card are the same as the VentureOne card.