|Image found here.|
Upon further inspection, we discovered lots more hidden fees and charges being applied to us from Chase Bank. While I eventually got many of the charges and fees waived, I discovered that as long as we were using the card abroad, we were still going to be charged for every ATM withdrawal and every foreign purchase on our debit card. This had to change.
According to my research, there is virtually no way to escape all fees associated with banking and travel abroad unless you go with cash enough to cover your expenses which is not recommended for obvious reasons. So what do you do? According to this great article - the first way to avoid excessive fees is to use credit cards for big purchases and debit cards for cash. But what are the best banks and cards to use?
Well, I don't know if it's the best system, but here is what Scott and I are doing:
Credit Cards: We have a Capital One credit card for big purchases. Typically, when you use a US credit card outside of the US, you will be charged in the foreign currency. The cost to convert the foreign currency to the card's "home" currency is usually 1% (or $1 for every $100). Some banks add a surcharge on top of that 1% just for fun. Capital One does not. Bills are easily paid online nowadays so the hassel of a paper trail is gone. Insert sound of money falling into a piggy bank.
Debit Cards for Purchases: Using a debit card abroad for purchases can also be very expensive and add up over time with most Visa or MasterCard branded cards charging 1%-3% the cost of the purchase. That said, we will be using our debit card only to withdraw cash and not to make purchases since we've got the good ole Capital One Card.
Debit Cards for ATM's: While I understand we pay for the convenience of being able to get money whenever and wherever, ATM fees abroad are often criminal and absurd. Most charge a flat fee (between $1-$5) for using a non-bank affiliated ATM (on TOP of what the foreign bank charges!), plus an additional "conversion" surcharge anywhere between 1%-3% of the total. After learning that there was virtually no way to eliminate the fees we were being charged by Chase, Scott and I have decided to move our accounts over to Charles Schwab (thanks to the advice of some great blog followers!). The checking account we selected requires no minimum balance and the only stipulation is that we have a Charles Schwab brokerage account (there is no minimum balance here either and there is no requirement to do anything with this account). The main reason we selected Charles Schwab, however, is the fact that they charge no ATM fees anywhere in the world*. Yeah, let me repeat that: NO ATM FEES...ANYWHERE! That is...amazing.
Savings: I will also have a savings account with Charles Schwab that my mom and/or dad will be tied to. That way, if for any reason we need someone to deposit our checks or do any stateside banking for us - they are authorized to do so. Because most of our accounts are going to be linked (my personal checking/savings, Scott's personal checking and our joint checking) we will be able to move money back and forth between these accounts and pay bills online with ease.
We have also kept one account with Bank of America, who are part of the Global ATM Alliance and have a pretty extensive network of affiliate banks around the world (the most important for the moment being Scotiabank, which is virtually all over the Caribbean). This is just to have more options, because options are good.
While we know we are not going to avoid the greedy banks completely, it sure feels good to know we have a pretty good system to stay on top of it and avoid most fees associated with traveling abroad. I'll be watching our accounts much more closely now!
Is there a better way? How do you bank abroad? We'd love to hear your thoughts!
* They actually do charge the fees upfront, but reimburse the account at the end of the month.