penny pinching- ATM or credit card

I use both - cash from the ATM for most purchases and the credit card for larger payments such as hotels.

Bank of America does not charge an ATM fee but does charge a foreign currency conversion fee on all transactions (ATM or a charge on a BOA Visa card). The fee depends upon the amount of the transaction and I'm not sure what the current fee is.

CapitolOne Mastercard is not supposed to charge a foreign conversion fee. I have a card from them to use on my trip laer this year. I will use it for charge purchases for larger purchases).

For daily miscellaneous transactions, I use cash and use my BOA ATM card for the cash. I try to use the ATM once a week if possible.

I got a Charles Schwab account with an ATM card attached as advised by people on this site. There were no fees at all! No conversion fee, no ATM fees, etc. We had no trouble at all using this card. We also got a Capital One, again as rec on this site. Didn't end up using it, but brought it with us just in case. I understand that there are also no fees with this card, but not sure since we didn't use it.

There is one hidden fee for credit cards that no one seems to consider. In Germany, at least, the small family run Pensionen and Gasthäuser, the places with the best cultural experience and lowest prices, rarely take credit cards, so if you have to look around for someplace that will take your card, you are probably going to spend more.

I use CapitalOne CC overseas for a few years now, and always noticed the conversion rate seems to be just a little higher than the official rate quoted on the web. I have been assuming CapitalOne just picked the highest rate of the day. However, the article I quoted above explains this as
"...the Parisian bank transmits the charge to the international MasterCard or Visa network, which actually executes the exchange and transfers the billing in U.S. dollars to the bank that issued your credit card, adding a one-percent fee that it charges your bank...". So even though CapitalOne does not charge us, the international Vias/Mastercard network charges a 1% fee.

Samething similar to the no fee ATM card, "...the international network makes the conversion, adds its one-percent conversion fee, and debits your dollar account.". So even though Bank of America (or Charles Schwab bank) does not charge me a few, this international network does charge 1%.

Does this make sense? Does this mean 1% is the lowest an average American can do?

Just to be sure we are clear on terms. The 1% the op referred to is the network fee which is buried in the exchange rate between the network and the card issuer. There have been postings that some card issuers will rebate this 1% but I do not know of any that do. If you truly have a no fee for both your debit and credit cards then it would not make any difference. However, a discount for cash is more concern in Europe than the US so if you can get a cash discount then it would be cheaper to pull the cash with a debit card and pay in cash. Remember, all fees after the network fee are determined by the card issuer. Call them !!!

Frank, thanks for the clarification. Yes the 1% fee I have been using is the fee on top of the official exchange rate.

Chister, why are you quibbling over a few dollars when your whole trip will cost you about $4,000-$6,000 or more depending on how long you are staying. It is so minor.

There is a major difference between using your ATM card or your credit card to withdraw cash. With your ATM card, you are withdrawing your own money. With the credit card, you are borrowing from the bank. They don't allow that for free especially if you don't pay it all off in full right away.

Re-read Lee's post. This is extremely true. Even small hotels that take credit cards, will sometimes give a discount for cash. (I am a person who believes savings pennies eventually saves dollars...which I think you are too) Anyway, take a credit card, but plan on using your ATM card. If you can find one that doesn't charge any fee for converting your money, that is great. I have found that my credit union charges a 1% fee and my bank charges a 3% fee...so I use my credit union when I travel out of the country. I have found the worse thing I can do is use a credit card for "borrowing" the money...even if I pay it off immediately. However, I do not have a capitol one card.

I just today received a letter from Bank of America announcing a change in their Foreign Transaction Fee. They have now," as of June 1, 2009 expanded the definition of "Foreign Transaction" to include transactions in U.S. dollars if they are made or processed outside of the United States. As a result, these transactions will be subject to the Foreign Transaction Fee of 3% of the dollar amount of each such Foreign Transaction. This fee is in addition to any other applicable transaction fee."
Be sure and check with your credit card company on the cost of transaction fees.

Bank of America has created a Global ATM Alliance where they have reciprocal arrangements with a number of banks around the world. Within this alliance, you are able to use your ATM or debit card in member bank ATMs without fees. There are three in Europe - Barclay's, Deutsche Bank and BNP Paribas. CLICK HERE to see a full list of banks and a description of how it works.

A few years ago when I realized I'd be traveling often, I opened a BofA checking acct. I used Barclays and BNP Paribas for ATMs, with no transaction fees. A few days ago, fearing that access to my acct was about to be shutdown, I used another French benk's ATM. The charges were 5 USD from BoA and 4 USD from the French bank for a 300 € withdrawal. That is about 2% in fees, total.

Larry, What you said is correct, BoA does not charge fees if one uses an ATM within the Global ATM Alliance.

However, if that leads people to think we are getting the official exchange rate this way, then it's misleading. It will be the official rate + 1% of whatever we get out of the ATM.

Yes we are pinching the last few dollars here, so this may be academic discussions for some people.