How to Avoid Foreign Transaction Fees

…or why you should never exchange your money at a exchange bureau (unless you need a lot of cash immediately).

I’m rather shocked that exchange bureaus exist since they provide horrid exchange rates for minimal convenience. And yet many people make an exchange counter the first place they stop after landing in a new destination.

Whenever I need cash in a foreign country, I always stop by an ATM to withdraw money. Your bank likely gives you the market exchange rate, which can be several percentage points better than what an exchange bureau will offer. And you can avoid fees by withdrawing money from partner banks (e.g. Bank of America cardholders can withdraw money without fees from Barclays in the UK, Scotiabank in Canada, BNP Paribas in France, etc.).

Or, you can do one better and just get an ATM card that will reimburse you for all ATM fees, including international withdrawals. I highly recommend the Charles Schwab High Yield Investor Checking Account, which does exactly that. Using this card, I don’t worry about whatever fees the ATM is charging since Schwab will reimburse me for everything at the end of the month, and I don’t need to spend time searching for a specific bank’s ATM. This also enables me to pull out cash just when I need it, so I’m not left with large sums of unspent foreign currency.

I’ll do a later post about no foreign transaction fee credit cards. Until then, what are your tips for getting cash in foreign currencies?