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Cash Abroad: ATMs, Local Currency, or Travelers Checks?
Posted by George on Monday, July 09, 2007 to
Most travel experts agree that the best way to get cash when traveling abroad is to use your ATM card, just as you would at home. But what if the ATM system is down (which always seems to happen on nights or weekends, when you cant call the bank). Or the ATM eats your card or seems to working but wont dispense your lire or pounds?
In these frustrating situations, it would help to have a bit of local currency before you can resolve your issues, which is why its a good idea to convert some currency before you leave for an international trip. Most major financial institutions (such as Chase and Citibank) have foreign currency on hand, although not all branches will offer this service and you may have to hunt for one that does.
Another option is to purchase travelers checks in foreign currencies through big companies like American Express or Visa. These are easily obtainable through the larger branches of many local banks or the American Automobile Association (AAA). But even though traveler's checks are advertised as being "safer than cash" because the issuers promise to replace them if they're lost or stolen, the issuer may refuse to refund or replace the amount if they decide youve been negligent. And more importantly, smaller merchants and some hotels may not accept travelers checks at all, and banks may charge you a fee to cash them (plus, youll often pay a fee to buy them).
Some major credit card companies (like Visa and American Express) also offer travelers check cards. This is a prepaid debit card that can be used throughout the world to make purchases or withdrawals from ATM machines. If your card is lost or stolen, the issuer will issue a new card or refund the unused balance. However, the fees associated with using these cards can add upthey can cost up to $15 just to get one, and fees are deducted per withdrawal, reload, and every time you make a purchase in a different currency than the one on the card. So if you fill it with US Dollars and purchase something in Euros, another fee is added for the currency exchange service. Sometimes, theres even an activation fee, so we dont recommend this form of payment.
Your best option for getting foreign currency is by simply using your ATM card, because exchange rates are lower than any other method. But well say it again and againits essential to notify your credit card issuer before you leave home, in case the bank freezes your account because of unusual foreign activity. In addition, its advisable to carry a second ATM card from another bank or another account at the same bank (keep it in a safe place, separate from your other ATM card) just in case you lose your first ATM card or it gets eaten by the machine.
However, if youre going to use an ATM, find a bank at home that doesnt charge to use foreign ATMs (some do, which can wipe out any savings on smaller withdrawals). For example, in the New York and Pennsylvania areas, Commerce Bank doesnt charge for using another banks ATMs. And the foreign bank you withdraw from may also have its own fees. Since I travel to the UK frequently, I have a savings account with Halifax, a UK bank. It doesnt pay interest, but I leave a few hundred dollars in it and pay no fees when I withdraw money from an ATM.
Citibank does not charge fees for withdrawals from its international ATMs and Bank of America charges no fees at select ATMs abroad.
Dont forget, too, that credit cards offer good exchange rates as well, but they do charge foreign transaction fees. Only two major card issuers dont charge any fees at all: Capital One and Discover. Discover is only accepted in Canada, Central America, Mexico, the Carribean, and China, but Capital One is accepted everywhere Visa or Mastercard are accepted (depending on which card you have).
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