As I am about to go on my second trip to the USA this year, I thought some advice on accessing your cash overseas would be helpful to those out there wishing to avoid the hundreds of dollars in fees you can pay. I am not usually one to shamelessly promote a product, but when they are saving me hundreds of dollars in light of no clear reason to do so, I am willing to oblige.
Cliff notes : If you are not interested in the details, just go get yourself a GE Money Clear Advantage MasterCard (I am in no way affiliated with them and I don’t get a cent either way). Please note that since writing this article, the card has been renamed the 28 Degrees mastercard. As discovered by Choice and my trip to the USA in Feb 09, it is the “only credit card with no currency conversion fee and it absorbs the MasterCard charge so the exchange rate you get should be close to the market wholesale rates”. It also has no cash advance fee or annual fee unlike other credit cards. But, as with all providers, daily interest applies to cash advances until you pay your bill (this can be avoided – see below).
When i recently went overseas, I loaded my credit card up with cash before I went so i didnt even have to pay interest on the money taken out. The only fee you pay is that of the ATM you are using. Usually 2-4 dollars in the USA depending on whether or not you are in Vegas. This fee is paid regardless of what method you use if you are using an ATM.
[ ] Fail
For some more details on your other options, read that choice link above. Or see my summary below:
- Bringing cash – If you buy around $1,000 worth of dollars before you get the airport, you are looking at around 2.5% worth of fees. Should you run out, or forget to do it before you get to the airport like most of us, expect fees between 7 and 11% (on a good day) from the kind folks at Travelex. Then enjoy the fun of keeping $1,000 safe, getting pickpocketed or needing more money at some stage (as you see below – it won’t come cheap).
- Travellers cheques and DCC – Both come with decent sized fees (2-4% + )and are likely to be accompanied by more fees when you attempt to use them. Plus, they are annoying. Avoid.
- Prepaid or Cash passport style cards – These are my favourite. Well, my favourite waste of money aimed at seducing the masses (see the google ads hitting you in the face when you search cash overseas – they dont come cheap but you pay for it). By pre-converting dollars onto a card, “expect exchange rate margins when you load and close the card: these are not specifically disclosed by the providers (always nice), and vary from day to day, fees to load the card: up to 1.1%, or a flat fee of up to $15 (you pay for the right to give them money), ATM withdrawal fees of up to $3.75, An exchange rate conversion fee when you use the card: varies between providers. With Travelex the cost is from 5.95% to 8.45% when the withdrawal is in a currency other than what you loaded to the card.” Also please don’t forget that $23.45 that is left on the card when you get back. Good luck getting that back. If you reload or close the account, further fees apply (up to $10 to close the account).
- Credit Cards – The friendly folk at your local bank would love you to use their card overseas. With currency conversion fees of 2-3.5% from the major banks (to give you the right to use the exchange rate they choose for you – which i have observed is worse than the rate that the GE Clearadvantage gives me the right to use for nothing). Remember to add to that 3-4.5% an ATM cash withdrawal fee and then interest on the money you are taking out and on your $3,000 holiday, you have kindly donated around $150 to your local bank for giving you the right to access your money overseas.
- ATM and Debit cards – These used to be great. The secret trick of overseas travel. Until the local bank whacked a massive minimum charge of $20-25 for each ATM withdrawal. Now as much as I love withdrawing 2,500 from an ATM in Vegas (where I would have to pay the greater of $20-25 or 2.5% with most banks), usually I find myself withdrawing more meek amounts. With 5 withdrawals on your trip (plus some lovely 5% fees credit card dinners), you are again up to $150 wasted.