Fee Frenzy

When you travel overseas, your bank is there with one hand in your pocket and another with a gun to your head. There is nothing worse than being caught in a cash society with no cash. Don’t look to the US embassy for help–they have little sympathy for messes you got yourself into, and will generally only assist (for a fee) with things such as repatriating your remains. Make sure you have plenty of options and be ready to pay through the nose. Never, ever, ever be caught without cash. You are nothing without it and nobody will help you. Sorry, Charlie, you’re not in Kansas anymore.

Here are the fees you can be charged for taking out cash from an ATM overseas:

Your own bank: They can charge you a fee at their option. None of my credit union cards charge a fee. Most commercial banks (Chase, WF, etc.) do charge a fee. This can be quite high; for example, it’s $5 at Wells Fargo.

Withdrawal limits can be fairly low at ATMs in Asia outside Japan, and your bank may have a low withdrawal limit set per transaction and per day. Multiple withdrawals means you will pay this fee over and over and over again.

Interbank ATM network: You will likely withdraw money using the network of either PLUS (operated by Visa) or Cirrus (operated by MasterCard). These networks give you the interbank rate, although it’s the worst intraday interbank rate across a 3 day period (naturally, they pocket the spread). Additionally they charge you a 1% “because we can” fee on top of this. In most cases, this is still better than the cash exchange rate, although not always.

Some banks charge an additional percentage fee on top of this. This goes to the executive bonus fund, and by the way, thanks for the bailout.

The ATM owner: Most foreign banks don’t charge a fee for foreign cardholders, but this annoyance is becoming increasingly common in Canada. This adds another $1 to $3, depending on the ATM and the bank.

Hot Bargain: This will nearly always be your friendly local member-owned credit union. They do not pay shareholders dividends or large bonuses and salaries to executives, so the savings are passed on to you. I use BECU, School Employees Credit Union of Washington, and Prevail Credit Union and they all offer the same hot deal.

Card Craziness

Credit cards can be used in some places, but nearly all credit cards charge “because we can” fees in excess of the 1% Visa/MasterCard network fees. American Express charges 2.4% although they’re more fair with the conversion rate (giving you the worst intraday rate on the day your transaction was actually processed, rather than a 3 day float).

  • Hot Bargain: Most credit cards issued by credit unions just pass along the 1% fee charged by Visa or MasterCard. My School Employees Credit Union of Washington card does this.
  • Hotter Bargain: HSBC absorbs the 1% fee charged by MasterCard if you have a HSBC Premier account. However, you must have 100K on deposit (brokerage, cash, or some combination) to get this card. Unfortunately, MasterCard isn’t widely accepted in Asia, but this is very useful in Europe and Canada where MasterCard is more widely accepted than Visa.
  • Hottest Bargain: Capital One absorbs the 1% fee charged by Visa. With some cards, they also provide 1% cash back on your transactions, meaning you effectively get a 1% discount to the (unfavorable) rate Visa gives you. This can help cushion the blow of Visa playing games with exchange rates. Visa is gaining broader acceptance in Asia, although Visa is different than Visa Electron (which is a smartcard and PIN based system). In Japan, you have a roughly 50/50 chance that they’ll be able to accept your US-issued Visa card rather than just Visa Electron cards.

Notify your banks before you leave. If you suddenly start withdrawing large amounts of money (something you have never done before) in China (somewhere you’ve never been before), the banks will block your account assuming fraud. The same goes for using your credit card. Of course, this will happen right at the beginning of a holiday weekend, and you can’t expect the banks to be troubled enough by you being out of money in a foreign country to answer the phone on weekends. This has even happened to me, and I am a frequent international traveler. My conversation with School Employees Credit Union went something like “can you please tell me any year in the past 5 years that I *haven’t* used my card in Japan? Why is this suddenly unusual?”

By the way, expect that even if you notify your banks, they’ll still block your cards anyway for random reasons or no reason. Be sure you have a cushion. Why? Because fuck you, that’s why. Access to your money is at their option, and don’t ever forget it.

When Things Go Sideways

First of all, carry a few hundred US dollars for emergencies. I cannot overemphasize the importance of this. Most places in Asia (and many other places around the world) are cash societies, and it can be difficult or impossible to use credit cards. US dollars are readily convertible at any bank or high-end hotel. Never, ever change money on the street or with taxi drivers; in most places it’s illegal and you are likely to get ripped off and/or be passed counterfeit bills.

I’ll probably be accused of being a shill for American Express. Trust me, I’m not. I use my American Express card as little as possible overseas, because they charge an extortionate 2.7% currency conversion fee, and they’re not widely accepted anyway. However, I always recommend you carry an American Express card and have their international collect number. Know how to make collect calls in the country where you’ll be traveling. If you get in a jam of any kind, they will reliably bail you out–for a price. Especially if you get in trouble with the police, don’t call the embassy, call American Express–they have local staff everywhere in the world, have government, legal and business connections and they will do whatever it takes to help. For a price. And you will be glad to pay it. Of course, for less dramatic situations like needing a hotel reservation when all the local hotels are full or needing emergency cash and a replacement card, they also provide excellent service. For a price. And you will be glad to pay it. The magic is never free, but it’s well worth it when you’re in a jam.

Update: Someone at work sent me a terrific page from the Flyer Guide wiki which lists practically every bank in the country and their international rates and fees. This is updated frequently and is probably the best resource I’ve ever seen on this subject. Click here to view.