| You probably know all about the ATM fees your | | | | the purchase price so it's more difficult to |
| bank charges. But you may be in for a surprise if | | | | determine exactly what they are. Here's what my |
| your bank adds an additional 3% "foreign | | | | research has uncovered: |
| exchange" fee on top of that for ATM | | | | Credit Card Fees on Overseas Purchases |
| withdrawals made overseas. That's pretty | | | | - Chase Visa - 3% |
| common so it pays to check the list first and go | | | | - Citibank Visa - 3% |
| with the bank that has competitive rates. The | | | | - CapitalOne Visa - 0% |
| same applies to your credit card. Some credit | | | | - American Express - 2% |
| card companies charge as much as a 3% adder | | | | - Bank of America Visa/MC/Amex - 3% |
| for overseas purchases while there is at least one | | | | - E*Trade Visa - 1% |
| company that charges a 0% adder and gives the | | | | - HSBC Visa - 3% |
| best available exchange rate on the day of | | | | - WaMu Providian - 1% |
| purchase. | | | | - Wells Fargo Visa - 3% |
| ATM Withdrawals | | | | Again, the fees for the first three credit card |
| In many countries using your ATM card is | | | | issuers in that list are from my personal |
| convenient, safe and you receive a better | | | | experience. I was asleep at the wheel for the |
| exchange rate than cash or travelers checks. | | | | longest time using my Chase Visa instead of my |
| Take the fun and exotic destination of Thailand, | | | | CapitalOne Visa, paying an extra 3% on |
| for example. ATMs are plentiful throughout the | | | | purchases when I did not need to. What seems |
| country, even in small cities, and there is no local | | | | sort of amazing is that CapitalOne somehow |
| ATM fee charged. Changing cash or travelers | | | | absorbs the 1% Visa money exchange fee. So |
| checks is convenient only in heart of the major | | | | purchases I have made on the same day with |
| tourist destinations and only during opening hours | | | | my Chase Visa and my CapitalOne Visa show a |
| of the exchange windows. Elsewhere you'll need | | | | 3% difference in the exchange rate. |
| to visit a bank branch during normal banking hours. | | | | There is another little trick that you need to |
| So use your ATM. But check this list first: | | | | watch out for when you make credit card |
| ATM Withdrawal "Foreign Exchange" Fees | | | | purchases. Some merchants will offer to charge |
| - Citibank - 3% | | | | your purchase in your home country currency |
| - WaMu - 1% | | | | rather than the local currency. From what I have |
| - Fidelity Investments - 0% | | | | experienced and read this is always a rip off. |
| - Bank of America - 1% | | | | They'll give you a much lower exchange rate than |
| - CapitalOne - 0% | | | | Visa will when the transaction books. You'll usually |
| - Chase - 3.5% | | | | get this offer from large merchants who have |
| - E*Trade - 1% | | | | many foreign tourists. It's easy to avoid. Just be |
| - HSBC - 1% | | | | aware of it, decline the offer, and be sure the |
| - PayPal - 1% | | | | purchase is charged in the local currency. |
| - Wells Fargo - 3% | | | | Offshore versus Onshore Exchange Rates |
| The fees charged by the first three banks in this | | | | Here's one more important tip about exchanging |
| list are from my own recent personal experience. | | | | money. This definitely applies to Thailand and may |
| I got burned by the Citibank 3% fee when they | | | | apply to some other countries. There are really |
| changed their fee structure in late 2006. When | | | | two exchange rates. The so-called "offshore rate" |
| you make a sizable withdrawal that 3% fee ends | | | | is what you will get if you purchase Thai money |
| up being far more than any normal ATM fees. | | | | outside of Thailand. This rate is about 10% lower |
| WaMu (that's the online banking division of | | | | than the "onshore rate". That's huge, a 10% |
| Washington Mutual) has a competitive 1% foreign | | | | difference. So wait until you arrive in Thailand to |
| exchange fee. I call this the "standard" fee | | | | exchange money. You are getting ripped if you do |
| because it is the fee that Visa international | | | | it at your departure airport. There are exchange |
| charges on foreign money transactions and the | | | | booths and ATMs all over the airport in Bangkok |
| banks charge this fee to recoup that cost. | | | | so you'll have no trouble changing money when |
| Interestingly, although the Fidelity representative I | | | | you arrive no matter what time it is. |
| spoke with said that this 1% fee is included for | | | | This issue can be particularly important if you are |
| ATM withdrawals from a Fidelity core account I | | | | transferring a large sum of money by bank wire |
| have made many withdrawals and there is no fee! | | | | from a U.S. bank to a bank in Thailand. A lot of |
| Is this a mistake? Probably not. Perhaps it is | | | | expats who are purchasing retirement homes in |
| related to the type of account, such as a | | | | Thailand are finding this out the hard way. |
| Premium Services account. The other notable | | | | Typically the U.S. bank is going to give you the |
| point is that many ATM withdrawals from Fidelity | | | | offshore rate and you are going to get ripped off |
| and WaMu within a few minutes of one another | | | | big time. But the picture is a little fuzzy now |
| always show a 0.3% better exchange rate from | | | | because there have been reports of people doing |
| Fidelity. | | | | bank wires from U.S. banks to Thai banks and |
| Note that many banks list the "foreign exchange | | | | receiving the onshore rate. In particular, a recent |
| fee" as a separate item on your statement so it's | | | | bank wire from Washington Mutual to Bangkok |
| easy to see how much they are charging. If your | | | | Bank was completed at the full onshore rate, and |
| bank doesn't then it's probably buried in a reduced | | | | on top of that there were no fees at either end. |
| exchange rate so check the rate they are giving | | | | That's worth investigating if you are in that |
| you carefully. Since exchange rates fluctuate it is | | | | situation. |
| sometimes it is difficult to confirm the exact | | | | Conclusion |
| amount of the fee. | | | | So use your ATM and credit cards when you are |
| Credit Cards | | | | traveling overseas. It is safe and convenient and |
| Now for credit cards the story is similar. Different | | | | you get a good exchange rate. Just be sure to |
| issuers charge different fees on overseas | | | | avoid those banks that charge excessive fees for |
| purchases made with your credit card. But the | | | | foreign transactions. |
| fees on credit card purchases are lumped in with | | | | |