I stopped using travelers checks almost 15 years ago and instead rely on my ATM card for getting cash and my credit card for large purchases, but the foreign transaction fees that banks and credit card companies charge can quickly add up — especially on a long trip.
Travel Tip: Before you leave, check with your bank and credit card companies to find out what they’ll charge you for using your cards abroad. Banks once hid this fee to the dismay of travelers reviewing their statements once they returned home. Starting in 2009, they’re now required to disclose this fee separate and apart from the other fees they charge.
Credit card companies most often charge a percent of the transaction amount (usually 3%) while banks charge either a percent or a flat fee (often whichever is higher) for foreign ATM withdrawals. Knowing which type of fee (percent vs. flat) can help you manage the cost of accessing cash. For example, if your bank charges a flat foreign ATM withdrawal fee of $5, larger, less frequent withdrawals will make more sense.
If you travel frequently or for long periods of time, consider getting a credit card that doesn’t charge a transaction fee on foreign purchases. For example, Capital One has a policy of not charging a foreign transaction fee on any of it’s credit cards and in November the British Airways Visa Signature became the first airline rewards card to waive fees on international purchases.
You may also want to consider opening a second checking account with a bank or credit union that charges a more favorable foreign ATM withdrawal fee. For example, I used to bank with Washington Mutual (which was “bought” by Chase during the bank solvency crisis a few years ago), which charges 3% on ATM withdrawals. The credit union I switched to only charges 1% and when I asked them if they were able to adjust or waive this, the explained that this was a fee charged to them by MasterCard.