When traveling abroad, whether on a short excursion or a multi-legged around-the-world adventure, look no further than the nearest ATM for the cheapest and most convenient way to get cash in local currencies.
Using an ATM abroad trumps buying currency from exchange companies and from local money-exchange stands. These outfits either charge high transaction fees ranging from 2% to 10% or offer poor exchange rates for your dollars, says Doug Lansky, a travel writer who has visited more than 100 countries. Exchange counters charge more than ATMs because their sole business is selling currency, Lansky says.
ATM cards also have an edge on credit cards when you need to withdraw cash abroad. Some credit card issuers, such as Citibank and First USA, charge up to 2% in fees for making transactions in foreign currency, but ATM withdrawals usually escape this fee. And cash is more widely accepted than credit cards in many countries.
Be sure to check the details on fees levied by your credit card company, bank, brokerage or credit union before you depart.
Convenient and accessible
On a seven-month round-the-world trip last year, Tobin Barth found ATMs in many small, rural areas as well as big cities. "ATMs are everywhere now, even in the smallest little places in Cambodia and Laos and Vietnam," he says, "and there's rarely transaction fees charged on their end."
To avoid getting dinged by bank fees with every withdrawal, Barth keeps his money in a TD Waterhouse checking account that is linked with his brokerage account. TD Waterhouse charges no fees for withdrawing funds from foreign ATMs as long as a minimum balance of $1,000 is maintained. Other financial institutions, such as Bank of America, charge fees of up to 2% on many accounts for overseas transactions.
Hitting a snag
Be aware that some ATMs may impose daily withdrawal limits, as Jeff Bianco and his mother Barbara found out on a round-the-world stop in Bulgaria last fall. Many of the ATMs Jeff came across limited the amount of local currency he could take out to the equivalent of about $125. That was nearly the daily cost of their tour guide and car alone. "I'd never seen that low of a withdrawal limit before," Bianco says.
If your bank back home hits you with a fee for each transaction from a foreign machine, frequent trips to the ATM can add up, but may still be cheaper than visiting a currency exchange counter. For example, Bianco's bank charged him $2 a day for each transaction. For seven days, he would have paid $14 in fees, versus $44 at an exchange counter charging 5%. If your destination imposes ATM withdrawal limits, you may decide paying the extra money at the exchange counter is worth the convenience of making a single trip.
Again, it pays to check your financial institution's international transaction policy before departure.
GETTING STARTED
