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Credit & Debit Card Fees

Hello!
I was calling to let our banks know we're traveling in Europe starting this weekend and found out both our banks charge transaction fees for all purchases. One bank is 1% (USAA) and the other is 3% (Suntrust). I'm thinking of opening an account with a new bank just to avoid these fees. Can anyone recommend a bank that they know doesn't charge a foreign transaction fee? This is surprisingly hard to find info on bank websites.

I am trying to avoid applying for a credit card at this time because we are in the process of purchasing a home and don't need any negative marks on our credit right now. Any help would be great!

Posted by
16843 posts

At least some Capital One accounts have no ATM fees. You may find the same deal at a local credit union. There are other options, but those are the two I use. I would definitely take the USAA ATM card along as a back-up. Keep it in your moneybelt or locked inside your suitcase in your hotel room--not in the same place as your (new) primary ATM card.

Posted by
995 posts

Without applying for a credit card, I can't offer a lot of help, but if you already have an Amazon Prime account, you may be eligible for the Amazon Prime Visa card which does NOT have a foreign transaction fee. There are several cards through Citi and AmEx that also have no fees, but these are credit cards. If you generally fly a specific airline, you may want to consider a card through the airline which not only gives bonus miles for purchases but may (may) also give zero foreign transaction fees.

Locally, I have not found a bank that offers no foreign transaction fees.

Posted by
20632 posts

It is not worth it to save 1%. 3% is pretty typical on credit cards. What are the debit card charges? If it is 1%, then use cash. We use cash about 95% of the time unless you going to northern Europe/Scandinavia.

Posted by
4689 posts

Look into Andrews Federal Credit Union in Maryland (you don't have to live there to join). You can get both a chip and PIN Visa card with no annual fee, no foreign transaction fee and an ATM card with no per use fee or no currency conversion fee. Only stipulation is that you need to be eligible to join (as with many credit unions), and to join Andrews you can join the American Consumer Council (ACC) for one year for $5 to join the credit union.

The reason it might be worth the hassle (for next trip!) is to have a separate savings account for travel with an ATM card separate from your primary account.

Posted by
2961 posts

This Weekend??? Far, far too late to open an account, get a card and be ready to travel. You will just need to pay the fees associated with your card and then plan a little further in advance prior to your next trip.

Charles Schwab investor checking account debit card: No foreign transaction fees, no atm fees ever.

Alaska Airlines Bank of America Credit card: No foreign transaction fees.

Posted by
17657 posts

Your heading says "Credit and Debit Card Fees", but you seem to be concerned only about credit card fees.

In the first place, except for POS purchases, use credit cards as little as possible. Never use them for meals and accommodations. I've spent some time in Europe, mostly German speaking areas, and, believe me, places that take credit cars for meals and accommodations charge way more than places that don't. You'll pay so much more using your credit card for these places that the small extra savings with a 0% credit card will be lost in the extra cost. Use cash from the ATMs as much as possible.

Second, I have an account with a credit union that charges 1% for cash withdrawals, and I can take it right out of my account. On a trip that costs me $3500 in cash, it'll cost me $35 in exchange fees. It's not worth $35 for me to deal with a bank I would not otherwise use.

Lastly, dealing with an out-of-town bank that charges no exchange fee but you don't have money in vs a bank you bank with that charges 1% is a losing proposition. With your local bank that you have money in, you can always make an account transfer at the last minute to cover your card bill, but the remote bank is counting on you missing the payment deadline due to the mail and paying a late fee.

Posted by
3313 posts

Who pays bills through the mail anymore, especially bank bills? Get with the times and pay things electronically. Not saying to set up payments where the company you owe gets to pull funds when it wants, but where you control the flow of the money. Saves you postage and you never have a late payment because the electronic payment is noted immediately (unless you just forget to pay the bill of course).

Posted by
4689 posts

Lee:

Lastly, dealing with an out-of-town bank that charges no exchange fee but you don't have money in vs a bank you bank with that charges 1% is a losing proposition. With your local bank that you have money in, you can always make an account transfer at the last minute to cover your card bill, but the remote bank is counting on you missing the payment deadline due to the mail and paying a late fee.

Not sure I understand what you're getting at. Many people have credit cards at banks where they have no savings/checking accounts. It's just a matter of paying the bill on time. Most of them allow you to setup a payment reminder. My own credit union will charge me a late fee on a credit card too if I miss the payment deadline; having it local buys me maybe an extra day or two or something before the deadline. Big deal.

Posted by
5 posts

Thanks for the responses. Maybe I didn't explain all that well based on some responses. We have the cash for our trip all sitting in a checking account. Our two banks charge 1% or 3% per transaction to use our debit card overseas. We have credit card accounts with zero balances that we could use, but they charge 3% per transaction as well. I'm not against using a credit card since we can pay it off as soon as we are home, but am just trying to avoid transaction fees on every purchase.

In the US, this 3% fee is typically covered by businesses, as a cost of doing business. I wasn't sure if that's the case in Europe.

I'm not super comfortable carrying around much cash, although we may try it as that seems to be most people's advice.

Our big expenses are already paid for (flights, trains, hotels, some excursions), so this is mostly in reference to meals, gifts, etc.

I think you are probably right in regards to it being too late to open a new account this week since I'm short on time.

I went to Europe 6 years ago and don't remember any additional fees appearing on receipts, but I believe it's because it's just rolled into the price the business charges.

I'm leaning towards using as much cash as possible based on these responses so thanks for the help!

Posted by
16843 posts

I don't think it is most people's advice that you carry around a lot of cash; quite the contrary. I think most of us would suggest looking at the fees attached to your current ATM and credit cards, seeking out a new banking arrangement if your ATM fees indicate that is advisable, and then using whichever form of payment makes the most sense, financially.

I wouldn't want to make a lot of tiny ATM withdrawals if I were paying 3% plus $5 per transaction (which is what some large banks apparently charge). In the absence of a flat fee, I'd be happy to make rather frequent small withdrawals so I didn't have to carry around very much cash at one time. There is some risk of losing money to a pickpocket unless you carry it under your clothing at all times.

Of course, i you have a credit card with a more attractive fee structure than what your bank offers, you'd want to minimize use of cash and charge purchases made from merchants who accept charge cards.

It is not generally considered a good idea to use the debit feature on your bank card at the point of purchase, because you don't have the same protections with debit-card purchases as you do with credit-card purchases.

My #1 tip, however, has nothing to do with the specifics of the cards themselves: Pay careful attention when paying for purchases either in person or via a vending machine. Do not walk away without your card. I have done that all too often in Europe (distracted, I guess), and it is a royal pain to be without your primary credit card.

Posted by
5504 posts

My Capital One Quicksilver Visa credit card converts FX at essentially Interbank with no mark-up. Actually, even better than a no FX mark-up, it has a 1.5% rebate.
https://www.nerdwallet.com/blog/credit-cards/capital-one-quicksilver-review/

Capital One® Quicksilver® Cash Rewards Credit Card: The basics

This card pays 1.5% cash back on every purchase, redeemable for a
check or a statement credit in any amount, at any time. There are no
minimum redemption thresholds to meet and no caps on the amount you
can earn. Even better, the annual fee is $0.

Posted by
20632 posts

....In the US, this 3% fee is typically covered by businesses, as a cost of doing business. I wasn't sure if that's the case in Europe. .....

You talking about two different fees. The 3% charged by the credit card is called a currency conversion fee. The fee is to cover the business costs with converting your credit card payment in euro to US dollars. The fee to use a credit card is charged to the merchant just as in the US. However, it is not uncommon in Europe to be charged an extra 1 or 2% if you use a credit card. In the US the merchants are prohibited by contract from passing along the credit card processing fee.

Just use a money belt or some other method is securely hide your extra cash and you are fine. We use cash about 95% of the time and will take out 3 to 400 euro at a time. Put a hundred in a pocket and the other 300 in the money belt and we are good to go.

Posted by
1507 posts

When calling to put travel alerts on my cards for an upcoming trip, I found out that my no ATM fee credit union is no longer so... it's now 1% plus $2 per transaction (plus whatever the local ATM decides to charge). Not a deal breaker, but it pays to shop around (sooner than the week before you leave....I'm in the same boat tylrrutledge!) My Capitol One and AmEx are zero transaction fees should I choose to use them (in South America, probably not much). Even if a bank is "no fee" they probably recoup their costs in other ways - lower interest rates, fees for other things. It takes some sleuthing to find the details, but they are usually findable. At this point, if I were you I'd use the USAA account primarily and Suntrust as a backup. Have a nice trip!

Posted by
11154 posts

You don't say where you're located. If you're near a TD Bank branch, you can open an account and walk out with an ATM card (they have the machine to make the cards in each branch - no waiting for a card to be mailed to you). So, you could do this even for an imminent trip.

Currently, their Convenience Checking has a $100 minimum balance to avoid fees, and each foreign ATM withdrawal costs you a flat $3 (no percentage foreign transaction fee). Their Premier checking has a $2500 minimum balance to avoid fees, and each foreign ATM withdawal has no fees at all!

I have no connection with them except as a satisfied customer.

Here's their branch locator web page: https://www.tdbank.com/net/absearch/

Posted by
1094 posts

I have a USAA credit card that gets 2 1/2 % back on every purchase. Their standard credit card you get 1 1/2 % back on every purchase. So with a 1% foreign transaction fee you are still money ahead.

I disagree about using cash instead of a credit card. I do not want to carry large amounts of cash. At home I withdraw $100 from an ATM and it lasts me 2 months. I use a credit card for everything I can both at home and overseas unless someone does not accept credit cards or is giving me a discount for using cash. I have found some hotels in Europe that will give you 5 or 10% off if you use cash. In those cases, I just hit up the ATMs for a couple of days. Using credit cards I know where I am spending money. With cash I have no record. Also, I end up with over $100 per month back in rewards (that is more than $1000 per year).

Oh, by the way, I pay off my credit card bill in full every month. In 50 years I have only paid $0.50 in interest on my credit cards.

Posted by
15578 posts

Put your spending money in the USAA account and use ATM's to keep a couple hundred EUR ( or other local currency) on you for spending cash, restock at an ATM as needed. It is a little late for new credit cards now, but get a credit cards without 3% conversion fees when you get home for the future. There are tons of them, Capitalone, Costco Visa, etc.

Posted by
125 posts

We will be traveling to Europe in Sept and this topic was a big discussion for us. We chose to open an account with USAA for credit and Schwab for debit.

So are I am, going through everything (I'm a major planner with lists, suggested websites and apps, etc saved in Google docs so it can be accessed anywhere by both my husband and myself) and we both overlooked the fact that we haven't received our Schwab cards yet.......either we missed it while TRYING to read the fine print or it wasn't mentioned.....ANYHOW, word of warning......Schwab needs $100 in the account before it will generate your cards! Haha we were waiting for our cards to transfer money. What a relief; I was afraid my cards for shipped somewhere else!

Posted by
1075 posts

Just pay the 1% and forget about it and enjoy the trip. There are far too many hassles involved with trying to use cash for everything, plus you'll probably end up with leftover cash at the end and then you'll lose a lot more converting it back. Even if you're diligent, you'll inevitably find a 20 Euro note stuck in a pocket somewhere once you get back.

Posted by
20632 posts

But that is the whole point, Dale. We always try to come home with a hundred or two in Euro. Ready for the next trip. And there is no hassle to using cash. If you think there is, please explain. As posted earlier we use cash about 95% of the time. WE simply find it easier and more convenient. There are many postings about concerns for credit card security. That goes away with cash.

Posted by
544 posts

Schwab is the only bank I'm aware of that doesn't charge any foreign transaction fees and refunds all international ATM fees as well.

B of A doesn't charge if you hold over $250k in assets at MerrillEdge, but that's not in the cards for most of us I imagine, haha.

For those looking for a Visa card that doesn't charge foreign fees, I'd suggest the Alliant Credit Union Visa ( http://www.alliantcreditunion.org/bank/visa-signature-card )

Or the BankAmericard Travel Rewards card for a no annual fee option.

There are dozens of other options, but these offer the highest cash back rebates without no merchant category restrictions.

Posted by
2045 posts

For an ATM card, CapOne charges no ATM fees, no foreign fee, and the bump on the exchange rate is typically under 1/2 of 1%, but does not refund fees charged by other ATMs. Those fees are easy to avoid.

CapOne’s Qucksilver MasterCard has no foreign transaction fee and 1.5 % cash back on everything. Amazon has a Visa card through Chase with no foreign transaction fee and 2% cashback on restaurants, which do code correctly in Europe (and also 3% cashback on Amazon purchase and 1% on everything else.) Both these cards convert transactions at the interbank rate.

Posted by
17657 posts

@Dale, I do most of my travel in Germany, and Germany is predominately a cash society. It would 1) be a hassle to try to use a credit card for major expenses and 2) most places to stay at in Germany that take credit cards are SIGNIFICANTLY more expensive to start with than place that don't take cards. I discovered years ago that small, family run gasthofs, pensions. private rooms, and apartments are far less expensive and give a far richer cultural experience than do big hotels (Rick says that too).

Other than clothing that my partner buys (I buy for her) at department stores in Germany, I use my credit card less than one time per trip. The few times I've used a credit card in Germany has been when, years ago, Bahn ticket automats only took cards and there was no ticket counter or there was a line at it.

As for coming home with leftover cash, like Frank, I deliberately bring home some cash so I don't have to start my trip looking for an ATM machine in the airport. I carry a netbook and keep track of expenses on a spreadsheet, which I patterned after expense forms I used to have to fill out for business trips. Before I go, I I fill out a separate from with all my known expenses.- I have reservations everywhere, so I know what that will cost, and I already know my transportation and entry expenses because I look that up before I go. I also know, from experience, about what I will spend on meals and miscellaneous. The spreadsheet totals my expected expenses. As I pay for things, I remove them from the spreadsheet so, at any point in time, I can see exactly how much I need to finish the trip. I make my last ATM withdrawal so that I will have a few hundred euro to start my next trip.

Posted by
4822 posts

Fees always cause a round robin discussion with little definition and much confusion.

First, any card that is branded "Visa or Mastercard" will incur a fee for a foreign transaction and a currency conversion that runs up to 1%. This is built into the transaction, your institution may deliniate as a separate fee, or just tell you what the transaction cost. (They do not charge it, they just pass it on) This 1% is based on cost above the interbank rate, and depending on time of day, if you do the math, you may or may not notice it, but it is there.

When you say you have "No Fees" you are still paying the 1%, Charles Schwab has it (I have an account there), my credit union has it, anyplace has it. Period.

Above that, some cards charge 3%, very common for a foreign transaction fee, others charge 5%, some debit cards also charge an out of network fee of up to $5. None of these are reimbursable, these are charged by your bank.

There may also be charges incurred by the ATM you use, uncommon in Europe now, but getting more so. Your card (Charles Schwab and others) may reimburse you, or not.

Finally, the issue of DCC may pop up, won't go into it at the moment, but an added cost.

Posted by
4689 posts

Paul, my credit union does not charge a currency conversion fee for ATM withdrawals. (Could be they eat the 1% - but they don't pass it on to their customers.) I called and asked specifically about this. I also checked the rates later on withdrawals I had made, and they closely tracked the daily conversion rates I expected. I wasn't charged a 1% fee.

I've had other accounts that definitely charge the 1%.

Posted by
4822 posts

Andrew,

I have a been a member of my credit union for over 30 years and have had the opportunity to see the inner workings a bit.

The "1%" often referred to is actually composed of two fees, a flat transaction fee, somewhere in the range of $0.40, and a currency conversion fee that is a % of the withdrawal, maybe about a 1/2%. This is charged on every international Visa or Mastercard transaction by the network, nobody is free from that.

A bank or credit union then has choices. They can break out each of the fees and show them on the statement, they can lump them into a single fee and show, or they can just tell you that the transaction was for X dollars. Additionally, they may charge you their own fees, either in place of, or in addition to the network fee. Over the years, my credit union has done each of the first three, but in each case, do the math, you are paying the 1%.

I have repeatedly "done the math" and the cost in Dollars is almost always slightly over the interbank rate. I say almost, because the rate changes constantly and reported rates can be a closing rate or an average daily rate, or if checking during the day, the last reported rate. The credit card networks bundling Millions of Dollars for a currency transaction, generally get the best rate of the day, so they may do the conversion at a lower rate than you see, sometimes low enough that it appears that you paid little or no fee, or even that your transaction was less than Interbank rate if markets are volitale, but you are still incurring the fee.

Posted by
2045 posts

I've also done the math for years also with my Schwab and CapOne ATM cards, and my CapOne Quicksilver Mastercard and Amazon Visa credit cards.
Results: CapOne runs maybe 1/2 of 1% over the interbank published rates, the Schwab less, so less that I no longer care. Both credit cards convert at the interbank rate for the day. Period.

I do not know where this "1 percent" is coming from, and if this is in fact from the Schwab, then I would love to compare actual statements, as it is not on ours.

And needless to say, there is no FTF on any of the above.

Posted by
4689 posts

Paul, I've done the math to my satisfaction and am convinced I am not paying a 1% fee. Maybe you are, but you aren't using my credit union.

Posted by
1029 posts

My credit union doesn’t charge me 1% either. My effective FX rate has always been within that day’s trading range.

So let’s say that usd euro is $1.20 per euro and a quick search shows that the average daily trading range over the last year is 80 to 85 pips or $.0080 to .0085 per euro. Let’s call the day’s range $1.20 to $1.2085. So a 1% fee would amount to at a minimum $.01200 to the base FX rate and easily push the actual rate outside the day’s trading range. A fee of 1/2% would be harder to detecting any given day but should be noticeable over the long term.

In the end if my actual effective exchange rate is within that day’s trading range I’m a happy camper.

Posted by
1 posts

I had an American Express "Everyday" card. They charge 2.7% transaction fee plus 3% for cash advance (even if you have a negative balance). Plus a confiscated card and 200 Eu loss, so won't be using that again for cash. Got the card back from the bank but no one can explain where the undisbursed cash went. I'll take some advice from the forum for future and take more time to prepare.

Posted by
2814 posts

Got the card back from the bank but no one can explain where the undisbursed cash went.

The lack of explanation would probably happen even if you were at a US bank. I recently had my debit card and the check I was trying to deposit eaten by my banks's ATM while it was closed. It took several visits and about 1 1/2 weeks to get the deposit credited (the card was replaced immediately). At one point I asked why the employee couldn't just go into the back room and find the check, since it must be there. He said he had to follow protocol, which meant filing a fraud claim with their fraud department.

Posted by
4690 posts

I believe that Paul and Larry's posts (about the evil 1% built-in) are only partly correct. It is not correct that every VISA debit or credit card user pays the 1%, whether they see it or not. It is currently illegal for credit card issuers to charge fees without breaking them out. And as others noted, some card issuers eat the 1%, if it actually exists. It is also not clear, at this point, whether the 1% (alleged) fee under discussion is related to currency conversion or VISA network usage, and whether it would apply equally to credit card/debit card RETAIL transactions, and to bank account withdrawals (of the user's own money) at foreign ATMs.

It's also important to understand that the 3% fees are largely a product of new rules restricting banks from extracting unfair fees by traditional means, like posting multiple daily charges in an order so as to maximize the number of overdraft fees in a single day! Consumer advocates predicted that the banks would find another way to make the money, and they did.