Sunday, February 22, 2009

ATM Foreign-Withdrawal Fees Update

Several banks actually seem to be lowering fees or reimbursing ATM-owner-imposed fees. (Isn’t competition – especially from the internet banks – a wonderful thing?) So rather than list a bunch of small banks offering 0% or 1% fees, or that reimburse ATM-owner fees, we thought we’d highlight some of the Wall of Shame Banks – banks that still charge exorbitant fees (sometimes as much as 3% plus $3 per transaction!) just so you can get your money from a wall. (Note that the high fees may not apply to all cards from these banks, and that there are generally no fees for withdrawals within each bank’s own network.) The banks to watch out for include: Chase, Citibank, Citizens, HSBC, ING, PNC, US Bank, and Wells Fargo.

There are really several types of ATM fees banks can charge:
1 – A fee from your bank (the card-issuing bank) to use any “foreign” ATM. In bank-speak, foreign means any ATM not affiliated with one of their branches. It is charged by your bank, not the ATM owner. (Some banks do not charge ATM fees for withdrawals within their “partner” networks. For example, Bank of America customers do not get charged ATM fees for withdrawals from Barclays in the UK, Deutsche Bank in Germany, and several other international banks.) A few banks do not charge any fees to use a foreign ATM.
2 – Some banks also have a “foreign”-foreign ATM fee that is higher for withdrawals from international ATMs than from domestic ATMs that are out of their network. Again, this will be a fee imposed by your bank. And again, some banks do not charge any foreign-foreign ATM fees.
3 – ATM-owner fees. These are the fees that pop up on an ATM screen saying the ATM you’re using will add a $2.50 (or whatever) fee to your cash withdrawal. Surprisingly, many international ATM machines do not impose these owner fees. These are the fees that banks like Schwab or Bank of Internet advertise they will refund to you. Most other banks do not rebate or refund these fees, so even if your bank doesn’t add any of its own fees, you could end up paying this one. (In the worst cases, you might be hit by a high-percentage fee from your bank for using a foreign ATM, plus get this ATM-owner fee added in as well. In that case, we suggest you get another bank.)
4 – Finally, there’s the possibility of a hidden “fee” you’ll never know about. That is the fact that you never really know what exchange rate a bank uses to convert your foreign-currency purchase or withdrawal into U.S. dollars. It may be the Interbank rate, or may be slightly higher.

If you’re planning on accessing cash from ATMs while traveling, and your bank charges ridiculous fees, we suggest opening an online checking account with the likes of Bank of Internet, Fidelity, Schwab, or State Farm. Make sure the online checking account has no monthly fees, and then fund that account with just enough money for your travels. This is probably much safer than carrying a debit card tied to your regular checking account (especially if you have a large balance). If your debit card were lost or stolen, your entire bank balance could be wiped out.

(This is part 3 of a short 3-part series of updates on international credit card and ATM use. Part 1. Part 2.)