Best ATM and Credit Cards for International Travel

I’ve been asked this question so many times, I had to finally answer it publicly. First of all, back in the day, savvy travelers would stock up on traveler’s checks before hitting the friendly skies. Traveler checks had the advantage of being replaceable if they were lost, and could be converted to local currency at a bank or a hotel (hotels never give the best rate, but they sure are convenient.) But today you get the best exchange rates (and convenience) from ATMs, as long as you know a few tricks. So here are the tricks.

There are several kinds of fees you may encounter when using American ATM cards or credit cards overseas.

* First is the ATM fee. This is the fee the foreign ATM charges you for using an out-of-network ATM. It is basically the same fee you’d pay in the states if you were using an ATM from a different banking network than your own. This usually is in the $2.00 to $5.00 range. NOTE: this is an ATM card, and does not apply to credit card transactions.

There are two ways to eliminate ATM fees. First is to use an ATM in your network. This is always a tricky operation. You will need to Google your particular card, then your location. After all this, you may be disappointed because these lists are never really up-to-date. I’ve done it successfully, but more times than not I am simply frustrated. To me this seems like a lot of work, and it cuts into my vacation time.

So, I’ve solved the problem by using an ATM card that REIMBURSES me every month for up to $25 of ATM fees. This reimbursement applies both in this country and overseas. The card I use is MasterCard ATM/debit card associated with my Capital One interest online checking account. So, before traveling I transfer my travel allowance into this online checking account, and then withdraw it in foreign currency wherever I am. I don’t know if this particular checking account is still available from Capital One (you can always ask them) but here’s a starter list of institutions that either offer these now (or did at one time!):

1) Capital One Interest Online Checking
2) Charles Schwab Bank High Yield Checking
3) First Republic ATM Rebate Checking
4) Morgan Stanley Weatlth Management Accounts

* Second is the foreign transaction fee. This is the fee your bank charges for converting your dollars into a foreign currency. Since I use a credit card for everything I can (collecting miles!) this is a much bigger amount than the $2-$5 ATM fee. You’ll get hit with this for both ATM withdrawals and credit card use, unless your card SPECIFICALLY offers FREE foreign transactions. These fees range from 1% to 3%, with 3% being approximately the median charge. There are, however, a handful of credit cards that do NOT charge a foreign transaction fee. Many of these cards charges an annual fee, so take this into consideration.

Cards that I know about (this is not an exhaustive list) that offer this benefit include:

1) Platinum Card® from American Express (big annual fee of $450, but offers many other benefits for frequent travelers)

2) PenFed Promise Card

3) All Capital One cards (be sure to check the fine print on your particular card.) Some of their card are free of annual fees, but not all.

4) Chase Sapphire Preferred ($95 annual fee)

5) Bank of America BankAmericard Travel Rewards (no annual fee)

For a more exhaustive (and updated list) try this Google search.

Now, for my tips.

1) Travel with at least two ATM cards, and one credit card. With two ATM cards you have some protection if a particular ATM/bank is not cooperating, a magnetic strip becomes demagnetized, or your card is lost. Being stuck without money is a travel nightmare.

2) Remember, even if you have your card, you can not withdraw from an ATM once your magnetic strip is ruined. To protect against demagnetization, I put my bank cards in protective sleeves like these.

3) Call each of your ATM banks and credit card issuers before leaving the country to advise them of your travel plans. Otherwise your card may be denied when you try to use it overseas.

4) When using ATMs, be sure to remove your ATM card as SOON as it is returned to you. Some banks have programmed their ATMs to “eat” cards that are NOT immediately removed as a precaution against you walking away and forgetting your card.

5) If the ATM is in the lobby of a bank with a mag strip reader to open the door, simply swipe your ATM card to open the bank door. This is a security precaution that is prevalent overseas, but not seen much in the US.

6) Shorten your PIN to 4 numbers or less. Some foreign machines do NOT accept PINs longer than 4 digits.

7) Reduce per transaction fees by taking the maximum daily amount out all at once, instead of making multiple small withdrawals.

8) It is common for European credit cards to have embedded chips that increase security. Instead of simply swiping the magnetic strip (as we do here in the US) these cards are read a with terminal that has a keyboard for the entry of a secret PIN. Most US cards, however, do NOT have these embedded chips and do not require a PIN for credit card purchases. So, if you run into an establishment that only uses these PIN terminals for credit card transactions, you will NOT be able to use any of your credit cards. Just try and make sure you have enough cash on you to cover these situations. For more details on US credit cards that employ this smart chip technology, here’s an article from The Points Guy.

Happy travels, and tell me where you are going by leaving a comment below.