Using an Overseas ATM? Beware This Crazy Bank Fee

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After a recent trip to Italy, I checked my bank account online to verify the four times I’d withdrawn cash from an ATM with my debit card.

I had fully expected the foreign ATM fee – $2.50 for each time I accessed a machine.

I was shocked by an additional “international processing fee,” which turned out to be 3 percent of each transaction. They ranged in size from $6.09 to $14.11 – or $40.49 in all.

I called my bank (which is remaining nameless here because I don’t want to encourage identity theft) and asked a banker what the charges were for. She said they were required by Visa, but that she would be willing to eliminate two of them.

I learned a bit later that Visa doesn’t charge cardholders a foreign transaction fee and called the banker back. She checked and confirmed that it was in fact a 3 percent fee charged by the bank.

I told her I was unhappy and was considering closing my accounts. I also said I didn’t recall seeing that fee after previous trips abroad and pointed out that the bank could have warned me about the fee when I’d called to let it know about my travel plans (which you should always do with your credit and debit cards before you travel far from home).

She waived all four fees, but said they would be charged in the future.

My credit card has no foreign transaction fee, and now I need a debit card that also doesn’t have one. With such a hefty fee, you can bet I won’t be using my current debit card outside the country again.

What’s a smart traveler to do?

In researching this post, I learned that Visa does charge a fee to banks for international transactions. Its website says:

Visa Inc. does not assess any fees to cardholders or merchants. Visa applies International Service Assessment (ISA) fees ranging from 0.15 to 1 percent to its financial institution partners for their use of the global payment system.

According to NerdWallet, many banks charge their customers a 3 percent fee for international use of a debit card, similar to the 3 percent foreign transaction fee charged by many credit cards. Some banks have a different fee for using using a debit card at an ATM versus using it to make a purchase. Overall the lowest fees are charged by credit unions.

But a handful of banks, including two online banks, have no debit card fee at all, NerdWallet says.

There’s my solution: I’ll soon be getting a debit card that doesn’t have a fee. Think of the money I’ll save on my next trip.

Both NerdWallet and The Points Guy identify the foreign processing fees charged for many bank debit cards. But those fees can change at any moment. Before you head out on your next trip abroad, call your bank to find out details. Leave yourself enough room to open an account somewhere else if your bank’s fees are unreasonable.

What about buying some euros from your bank at home or going to one of those money exchange places once you arrive at your destination airport? That’s not a smart way to exchange money because of the lousy exchange rate and high fees. Says The Points Guy:

I’m always stunned when I hear my friends and family talk about purchasing traveler’s cheques or purchasing euros ahead of a trip to Europe. They clearly don’t get it!

Have you been surprised by a bank fee? Share your story in the comments below or on our Facebook page.

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Comments & discussion

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  • FJL

    First Republic Bank, and likely some other smaller banks, offer free ATM use world wide.

  • Draftdog

    Well, who are the handful of banks that don’t charge a fee?