Some brief advice on accessing your money from the road
An LA-based reader named Jon recently emailed me with a question about access to money on the road. “I plan to vagabond around the world for an undetermined length of time,” he wrote. “I want to avoid ATM fees, charges on currency exchanges, and inflated exchange rates. Are there institutions that offer sensible banking solutions for the vagabonder? Where would I look for the cheapest ways to access my income?”
This is what I told him:
I’d go with the ATM to access local cash overseas — but check into ATM fees, since some banks (like Wells Fargo and Bank of America) charge as much as $5 per transaction, and others (like Capital One, as of this writing) charge no fee at all. Check with your own bank to see what ATM policies are. I’ve found that ATM fees vary more than exchange rates. Whatever the fee, try to avoid hitting the ATM again and again; try to estimate the cash you’ll need, and take out an accurate amount. That’s better than getting hit with a bunch of fees for small transactions.
Travelers checks, exchange kiosks, and credit card advances are all lousy ways to get money, with bad rates and high fees.
But again, call your bank and see what their policies are, given your situation. You might also want to visit bankrate.com and check out their bank comparisons on foreign transactions.
June 22nd, 2009 at 5:23 am
Most banks have alliances with foreign banks that reduce fees to zero if you use an allied bank’s ATM. For example, I have a Bank of America account and use Deutsche Bank ATMs in Europe and Westpac ATMs in Australia without fees.
Similarly, customers of those banks use Bank of America ATMs for free in the USA. Ask your bank for tips to reduce fees, most will happily share the secrets with you.
June 22nd, 2009 at 2:00 pm
Look into TDBank as well. I think they are primarily in the Northeast, but you can open an account online. They have no fees as well.
I spent about $500 in fees on my last trip (8 months). If I do not get a card with no fees then I am just going to save an extra $700-$800 towards my next trip so I don’t have to worry about fees eating my budget.
Also, if you do wind up with a card with fees, it behooves you to take out more money less often. For example, with my Bank of America card it would cost me $18 to take out $200 three times, but only $6 to take out $600 once. (The math might not add up correctly, but the point stays the same)
I had a wamu card that charged 1% only, which is not too bad and BofA card that charged $5 per transaction with a 1% fee. So obviously the wamu card was my choice, but the BofA was a Visa which might be accepted where the wamu mastercard wasn’t.
However, wamu is now chase and they charge 3% + $3. Which means for withdrawals over $100 it is better for me to use my BofA card because I will be charged less. So, my point is check to see at what point is it better to use one card over the other to be charged less in fees.
June 22nd, 2009 at 3:43 pm
Here’s a wiki that breaks down all the different options on this topic. It was compiled by various flyertalk users so parts could be slightly inaccurate or out of date. It’s definitely a great resource though.
https://www.flyerguide.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange
June 22nd, 2009 at 6:20 pm
Try to avoid using any ATM not part of a bank branch. ATMs inside convenience stores and other shops may not have the safeguards to prevent someone from stealing your PIN or magnetic information from the strip on the card. Using that, you card can be cloned and your account emptied.
June 23rd, 2009 at 12:28 am
The following is a safe and viable method:
I assume that you will spend considerable amount of time in certain regions, for example South Asia, Southeast Asia, Central Europe etc. For example you can make Singapore or Bangkok your base for travels in all of Southeast Asia. These days it is not difficult to open a bank account in a foreign country. Typically it can be accomplished with as little as having a local address such as you can have renting a room from a local resident.
Before you leave US you will setup ACH bank account which allows you to wire transfer money from your US bank account into any other bank account globally, and you can accomplish it by yourself through online access to your account, hence can do so anywhere you may be as long as you can get internet access. When you will be in need of money, you can wire transfer funds into your own account in, say Singapore. As in some countries you will have to convert the funds upon receipt into local currency, I recommend not opening an account with more than what you may have an immediate need for while in the respective country or a region.
Typical cost of an ACH account in US is $20 to $25/month for wire maintenance and usually no more than $8 per wire transfer. You can recoup some of the account associated cost by keeping your travel funds in an interest bearing account such money market account. The setup is absolutely safe, allowing you to be in control. One thing you need to be aware of is that if you should leave $10,000 or more in your account overseas, you’ll have to report its existence to IRS on your tax return at the end of the tax year. Alternative is to close the account before the end of the year or keep a balance that is less than the amount that would require you to disclose its existence. Another alternative is you wire from your own account in US to an account of a friend in whatever the country, or you wire to a bank where you may want to pickup the money. Last, keep in mind that you will always be charged some money to receive the wire, wherever you will have the account or whosever account you may use, but the idea is you will not need to wire to yourself too often. There are other possibilities associated with the above scenario but the basic premise here is that you are in control of your own money between your account home and wherever you may need it. In a long run this method will certainly save you money on ATM fees.
June 23rd, 2009 at 11:48 pm
This is fantastic info. Thanks for all the advice. I’ve been a digital nomad for a few months now and working out the kinks in the process. I’ve been just taking large amounts out of my atm when I need cash. I can see now why people like Chris over on The art of non conformity swear by cash. I’ve been using my debit card for transactions and found that a ton of places only take cash. Credit in the rest of the world is a pain in the ass it seems. Back in the states credit is accepted everywhere. Something I am getting used too for sure. Cheers from Melbourne!