When it comes to personal finances we like to consider ourselves pretty savvy. After graduating from University debt free* we were able to purchase our first home in February 2010, and since then we've been tediously stashing savings away for travel.
Now I'll be the first to call myself cheap - Travis pokes fun at my frugal ways whenever the opportunity presents itself - so you can imagine my reaction to the thought of paying the bank to let me access my own money while abroad.
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If you haven't traveled much, or checked your bank statements after a trip, you might be surprised to discover all the sneaky fees banks add on when paying or withdrawing money abroad. Foreign currency conversion fees - or what you will be charged for using your debit and credit card outside your home country - can really add up, especially if your trip is lengthy like ours. Although I was able to find a lot of information about the big bad banks in the US, and a movement towards US credit cards eliminating the foreign transaction fee, finding information specific to Canada (where we live!) was a bit harder.
What I was able to find...
Debit Cards: It seems that most banks charge a standard $2-3 per debit withdrawal for using a foreign ATM, as well as a fixed percentage foreign currency conversion fee on the total amount withdrawn - 2.5% is common but this rate varies from bank to bank.
Credit Cards: Again, a fixed percentage foreign currency conversion fee in the 2.5% range is charged on your purchase, once it's converted back to your home currency - however some banks add in an extra step by first converting the purchase to US dollars before Canadian. Here's a great chart from the Financial Consumer Agency of Canada that compares credit card fees.
Is it just me or does it seem like they're double dipping a bit?
Because the banks don't have your best interest at heart, and have become proficient in hiking fees and hiding extra charges, it's important to do your homework before hopping across the border for a weekend of shopping or taking an extended trip halfway around the world. Call up your bank, or go online, and investigate a bit, I didn't know what my bank's international charges were and I was quite surprised once I found out!
It's also important to note that the debit/credit card system that works for you at home might not be the best choice when traveling abroad. For example, President's Choice is my primary bank at home and I'm very happy with them, however when it comes to travel I don't want to pay the fees they charge. Unfortunately they aren't alone in charging these fees - in fact I haven't found a single bank in Canada that doesn't charge foreign currency conversion fees and only one credit card (Amazon.ca Rewards Visa card) that has eliminated it.
But that didn't deter me and after searching around I found the TD Canada Trust Select Services Account. This account has a monthly fee of $30 (waived if you maintain a minimum balance of $5,000) and although they still charges a fixed 2.5% foreign currency conversion fee, there are no fees for non TD ATM use anywhere in the world.
Yes, you read that right, anywhere in the world! That means that I'll save the $2-3 per transaction and only have to pay the foreign currency conversion fees. Since this will be our joint travel account we don't think the minimum monthly balance will be an issue - we wanted to keep an "emergency fund" of about $5,000 anyways - and the ATM savings could amount to $40-50 over the length of our trip. While it might not seem like much, when you are planning a budget trip every little bit helps!
A few other options you may want to consider if you're looking for a travel credit cards, I've read great things about Capital One's Travel Rewards cards as well as MBNA Platinum Plus MasterCard.
*Credit goes to our parents who let us live at home rent-free while studying, and some great summer jobs that covered tuition and books.
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