Whether you need euros, shekels, pesos or pounds, making a withdrawal from an ATM is generally the easiest and cheapest way to get cash abroad. The biggest advantage of exchanging money with your ATM card is that all cash withdrawals, regardless of size, are exchanged based on the wholesale exchange rate, which is usually reserved only for very large interbank exchanges.
This rate is often significantly better than what you can get from exchanging money at a local exchange counter. In addition, local banks or money change bureaus will add on transaction fees, which can easily eat up another 2 percent of your money.
That’s not to say there aren’t any fees associated with withdrawals at international ATMs — see below — but if you need cash, you will still almost always get the best exchange rate at the lowest possible cost by using your ATM card.
Related:Get the Best Exchange Rate
If your ATM card is linked to the PLUS, Cirrus or Maestro networks, you have the option of using it to obtain cash virtually anywhere in the U.S. and in hundreds of countries worldwide. Each network has more than a million ATMs. The PLUS network is associated with Visa, so your Visa card will usually work at those ATMs. Likewise, the Cirrus and Maestro networks are associated with MasterCard, and so ATMs marked with these logos usually accept MasterCard for cash advances. The majority of ATMs accept cards from any of these major networks.
Before you leave home with just your ATM card, however, make sure that the Cirrus, Maestro or PLUS networks are readily available where you’re going. While these networks are increasingly common overseas, they are still only available at a limited number of banks in some countries. Each network has an online locator to help you find international ATMs:
MasterCard/Cirrus/Maestro ATM Locator
Visa/PLUS ATM Locator
The back of your ATM card often shows the logos of the networks your card is linked to. If your card is not a part of either Cirrus or PLUS, you may find it difficult to find ATMs to use abroad. Contact your bank for assistance.
If your PIN is based on letters rather than numbers, translate the letters into numbers before leaving the country. Many ATMs only have numbers on the keypad. Another thing to keep in mind: Some ATMs abroad will only let you access the primary account on your ATM card.
Sudden changes in your account activity, such as frequent withdrawals in a foreign country using your ATM card, can sometimes trigger a fraud alert and cause your bank to freeze your account. To prevent being stranded overseas without a functioning ATM card, call your bank before you leave to let them know where and when you will be traveling. During the same phone call, ask for a number that you can call from overseas in case your card is lost or stolen — often the number listed on the back of your card will only work in your home country. Be sure to keep this number in a separate place from your card.
Related:The Best Way to Carry Money Overseas
It’s important to have a back-up plan in case your card is lost, stolen or eaten by an ATM machine; this could be in the form of a second ATM card (either your own or a travel companion’s), cash, credit cards or traveler’s checks.
At the very least you will probably be charged the same transaction fee, if any, that your bank charges you when using another bank’s ATM. However, many banks charge higher fees for international ATM withdrawals — either a flat rate (typically $1 – $6) or a set percentage of your total withdrawal (usually 1 – 3 percent). Check with your bank before each trip abroad, as these fees can change often and without warning. To add insult to injury, you may also be charged a fee by the owner of the foreign ATM.
Because these small charges can add up quickly, you will probably want to withdraw larger amounts than you might normally do at home — so be sure you have a safe, well-concealed place to keep your cash. (See Money Safety Tips for Travelers for more.) When deciding how much to withdraw, try to choose an uneven amount (180 euros rather than 200, for instance) so you don’t wind up with huge bills that you’ll have trouble breaking.
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Customers of Nationwide still enjoy the best deal when it comes to withdrawing cash from an ATM abroad, a Guardian Money survey has found.
The building society shocked loyal customers in March when it reversed its previous policy and said it would start passing on charges – currently 0.84% – levied by Visa on card usage outside Europe.
This charge came into force on 1 June, yet our survey shows that Nationwide still beats its competitors by a wide margin. Its debit cards remain commission-free in Europe and it does not charge per-transaction fees, which at some banks add a further £1.50 to the bill.
Even in the US, a Nationwide card remains the cheapest way to withdraw money from an ATM, despite the addition of the 0.84% Visa charge.
The survey found the highest-charging banks were Lloyds TSB and Barclays. Lloyds TSB, which has more current account holders than any other bank in Britain, effectively charges holidaymakers around 5% to withdraw their money when abroad. In other words a family of four, withdrawing €600 during the course of a two-week holiday in Spain this summer, will be charged around £25 more by Lloyds TSB than Nationwide.
The banks use a bewildering array of fees and charges. These go under names such as "exchange rate transaction fee" or "exchange rate loading" but, in effect, they mean the same thing – that even if the bank uses an attractive exchange rate, the bill that hits your current account will be loaded. It is estimated that holidaymakers are losing around £500m through unnecessary charges.
Lloyds TSB charges a 2.99% foreign exchange fee, plus a further 1.5% cash handling fee up to a maximum of £4.50 per transaction. Barclays charges a 2.75% commission rate and a 2% cash handling fee up to a maximum of £4.50 per ATM withdrawal. HSBC makes an "exchange rate adjustment" of 2.75% plus a separate ATM fee. Its customers with Maestro/Solo cards are charged marginally more than its customers holding Visa debit cards.
It will be cheaper for the customers of HSBC to pay for goods abroad directly with their debit card than spending cash withdrawn from an ATM.
For example, HSBC says a Maestro/Solo customer who spent €200 in a shop in France on Tuesday this week would have seen £176.46 come out of their account, compared with £179.99 if the same amount was withdrawn in cash at an ATM.
"Many of our competitors charge a separate transaction fee for overseas point-of-sale transactions (in shops, stores, supermarkets, etc) but HSBC does not charge this to any of our customers."
In 2005, Guardian Money carried out a similar survey on ATM charges abroad. Comparing then with now, the most striking fact is not who is at the top or bottom of the table (the positions have moved little) but just how few euros holidaymakers now pick up for their sterling.
In 2005 the best value provider, Nationwide, would charge a customer £137.18 for €200. Despite a modest rally in sterling, today it would cost £172.09 – or 25% more. No wonder so many holidaymakers will be feeling cash-strapped this year.
Beware of the DCC
Don't say yes to the nice shop assistant or car hire worker in Europe who asks if you'd like your debit/credit card transaction priced in sterling. And don't say yes to the cash machine message which says: "You can be charged in GBP". Agree, and you will fall victim to something called dynamic currency conversion, known as DCC, that nearly always leaves British holidaymakers out of pocket.
It is tempting to transact in sterling. The shop assistant or the cash machine will be able to show exactly how much money you are spending in pounds rather than euros. But the likelihood is that the exchange rate used will prove highly unattractive. You should always be given a choice about whether you want to transact in sterling. And your answer should always be no.
Nationwide building society estimates that the practice costs unsuspecting Britons abroad more than £1m a week. The profits from the poor exchange rate and high conversion fee are funnelled back to the shops, hotels, car hire companies and banks.
Travelex, which promotes DCC, says it gives consumers exchange rate certainty. But it promises its business partners a new revenue stream by "capturing a share of foreign exchange revenue" paid by consumers.
So what should holidaymakers do?
• When using a chip and pin card, if the transaction is priced in sterling, ask for it to be changed into euros.
•If the assistant says they don't know how to override the DCC system, ask for the transaction to be voided and started again.