By Laura McMullen
Your travel dollars are supposed to fund zip lining through the forest, sipping daiquiris on the beach and getting lost in museums. You didn't save money for your vacation only to hand it over to banks and ATM operators in the form of fees. But that's where a chunk of your cash could go if you don't plan ahead.
Withdraw money from a foreign ATM, and your bank may hit you with an ATM fee of $2 to $5 and a foreign transaction fee of up to 3% of the cash you received. The owners of the ATM may charge a fee, too. With the following tips, you can save that money and use it for a few scoops of gelato instead.
Open a checking account with Schwab Bank or Capital One 360. These are NerdWallet's favorite banks for international travel. With a Schwab Bank High Yield Investor Checking Account, you don't pay foreign transaction fees and you're reimbursed for every ATM fee at home or abroad. You need a Schwab investment account to qualify, and there's no minimum balance or monthly fee. The Capital One 360 checking account is a solid option for international travel, too. Although it doesn't offer ATM reimbursements, Capital One 360 account holders don't pay foreign transaction fees.
Use in-network ATMs. Your financial institution may have its own fee-free ATMs abroad or may partner with other institutions to offer no-fee access to your cash. In either case, you'll be charged only a foreign transaction fee.
If you withdraw cash from an ATM that isn't connected to your domestic bank, be prepared to pay a percentage for the foreign transaction, plus a flat fee of $2 to $5 for using the out-of-network ATM. In some cases, the owner of the ATM will charge a fee, too.
Call your financial institution or send a message through its website to find out if there will be ATMs where you don't pay fees in the area you'll be visiting. Once abroad, your bank's app may help you find the nearest fee-free ATM.
Order cash through your bank. Here's another way your foresight will pay off. A few weeks before you depart the U.S., contact your bank to order foreign currency. You'll be able to pick up those euros, yen or pesos at your local branch.
The currency-exchange rate offered by your financial institution may be one of the best you'll find. Online currency converters tend to have less favorable rates and charge for delivery. And exchange options at an airport or hotel, for example, typically have the worst rates and you'll also pay a flat fee. Convenience typically comes at a cost. "The less planning you have to do to get your cash, the more you'll pay for it," says NerdWallet banking expert Devan Goldstein.
Bring a credit card with no foreign transaction fees. If you don't have one, consider applying for a credit card with no foreign transaction fees to pay for purchases. If you use a card without this feature, you can expect to pay the card issuer a fee of about 3% of every purchase. Some cards charge an annual fee and offer travel-related perks, such as rewards, travel insurance and airline and hotel benefits.
Remember: Use these cards to avoid fees on credit purchases, but don't use your credit card to withdraw money from an ATM. Whether you're in Australia or Arkansas, using a credit card at an ATM means you'll be hit with cash-advance fees and interest on the cash.
Order cards with EMV chips. If your credit card doesn't already have the rectangular EMV chip that require a dip, rather than a swipe, contact your issuer and request an updated version. Merchants have been using EMV technology around the world for decades, and they may not process transactions without a chip.
Contact your bank to request an EMV-enabled debit card, too. In Europe, ATMs and kiosks increasingly are requiring these kinds of cards.
Alert your bank to your upcoming travels. Let your bank know where you're going and when. Otherwise, they may suspect that the gelato and zip lining purchases across the world are fraudulent and deactivate your card. If that happens, then ATM fees will be the least of your problems.
Laura McMullen is a staff writer at NerdWallet, a personal finance website. Email: lmcmullen@nerdwallet.com. Twitter: @lauraemcmullen.