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Fall foreign currency report

Earlier this year, I updated my 2006 report on the advantages and disadvantages of using plastic, cash, and travelers checks when you travel outside the U.S. Despite a few recent changes, my conclusions remain as before. Plastic is still best, but some plastic is better than others. The revised tables in this report show the latest information I have about fees and charges some of the larger banks add to foreign transactions on their credit and debit (ATM) cards.

As always, any such tabulations remain a work in progress:

  • I add additional banks as I receive information from them, and I add available data from and other outside sources.
  • Charges among previously listed banks are in constant flux.

I always like to hear from readers who have either corrections or information on other banks’ policies. And I like to hear from any banks with corrections or information to share with’s visitors.

Recent changes

Although basic recommendations in the earlier report remain the same, I found a few significant additions and changes:

  • The biggest change I see is that some banks have backed away from adding “dynamic conversion” surcharges to U.S. dollar charges that originate outside the U.S. Dynamic conversion—where merchants convert a foreign charge into dollars when you buy—is still risky, in that the merchant sets the conversion rate, which might be quite poor.
  • I’ve added some information on use of debits cards to make purchases and on credit cards issued by Canadian banks.
  • The tables show a few minor adjustments in surcharges and transaction charges.

Credit cards

The earlier report covered the basics of how the international MasterCard and Visa networks convert foreign charges. For this “service” they add a fee of one percent, which they charge to your bank (not your account). If it were the only cost, that one-percent fee would be fine: It’s much less than you lose exchanging currencies any other way.

What’s not fine is that most banks tack on surcharges of their own—these days, typically two percent—to any charges that originate outside the U.S. That surcharge is a pure gouge. Your bank does nothing more than when it processes purchases in the U.S. It adds the two percent out of pure greed, and because it can.

Fortunately, a few banks do not add a surcharge. The first table tells the story for some of the leading card-issuing banks, as well as for American Express. I should note that finding this information is very difficult, and while I’ve done my best to collect accurate information, I welcome any corrections you may have. The data entries show total surcharge applied, both by the international networks and the issuing banks:

Bank Surcharge on foreign currency charges Surcharge on U.S. dollar charges
American Express 2% 2%
Bank of America 3% 0%
Capital One 0% 0%
Chase 3% 0%
Citi 3% 0%
Diners Club 3% 3%
Juniper 3% 3%
US Bank 3% 3%
USAA 3% 3%
Washington Mutual 1% 1%
Wells Fargo 3% 0%

Last time, I noted the fairly recent development of “dynamic conversion,” where some local merchants convert your bill to U.S. dollars at the time of the purchase. The catch here is that nobody requires local merchants to use fair exchange rates. Merchants are free to use whatever phony rate they choose. If a merchant uses an exchange rate that is, for example six percent below the wholesale rate, your exchange cost could be double what you’d pay on a foreign-currency billing. Fortunately, as noted, some banks no longer surcharge U.S. dollar billings.

These days, almost all debit cards also carry a MasterCard or Visa logo, and you can use them just like credit cards to make purchases. The banks tell me that the surcharges are the same as for their credit cards.

Canadian credit cards

The Financial Consumer Agency of Canada (FCAC) publishes a report on Canadian banks that lists surcharges for conversion of credit card charges that originate outside Canada. According to this publication:

  • Most big Canadian banks add a surcharge of 2.5 percent.
  • Citizens Bank of Canada, Home Trust, and Vancity Credit Union add two percent.
  • Coast Capital Savings, Desjardins, and Westminster Savings Credit Union add 1.8 percent.

According to a FCAC spokesperson, those charges include the one-percent fee added by the international MasterCard and Visa networks, so they represent the total cost to Canadian cardholders.

Debit cards for currency

When you use your debit (ATM) card to get local currency at an ATM outside the U.S., the international networks immediately calculate the exchange and debit your account in dollars. Until recently, the only extra charge you paid was a flat fee—usually $3—for each withdrawal, regardless of the amount of money you received. Lately, however, some big banks have either (1) hiked the fee to $5, (2) added a conversion surcharge, or (3) done both. The second table shows data for a few of the largest banks, in terms of number of outstanding checking accounts:

Bank Transaction fee for unaffiliated bank ATM Transaction fee for affiliated bank ATM Surcharge for unaffiliated bank ATM Surcharge for affiliated bank ATM
Bank of America $5 $0 1% 0%
Chase $3 N/A 3% N/A
Citi $3 $0 3% 0%
Washington Mutual $0 N/A 1% NA
Wells Fargo $5 N/A 0% N/A

The table shows three ways to avoid a surcharge of more than one percent:

  • If you have (or open) an account with Citi, you can withdraw foreign currencies from ATMs at Citi branches outside the U.S. with no transaction fee. Citi has branches in dozens of foreign countries: In some, it has retail branches throughout the country; in others, it has only one or two offices in one or two major cities. You can easily find out whether a Citi account will work for your trip by checking the worldwide branch locator on
  • If you have (or open) an account with Bank of America, you can withdraw foreign currencies from ATMs owned by member banks of the Global ATM Alliance with no transaction fee: Scotia Bank in Canada, Barclay’s Bank in the UK, Deutsche Bank in Germany, Paribas in France, and Westpac in Australia. All five have branches throughout their home countries. In other countries, however, BoA charges more than most other banks.
  • Many smaller banks—or bigger banks with elite-status accounts for some favored customers—add no fee of their own and agree to refund any fees that other banks apply, usually with a limit on the number of withdrawals per month.

Obviously, the spread between the best and worst deals on debit-card withdrawals is much wider than the spread among credit cards. The very best deals, such as Citi and the Global ATM Alliance, are as good as the best credit cards, while with the worst deals, you lose more than when you exchange currency or travelers checks.

Whatever you do, use a debit card for local currency from an ATM, not a credit card. When you use a credit card to get cash, you’re on the hook for a number of extra fees and charges.

When you travel

My overall recommendations remain the same as they’ve been for several years. To minimize your exchange losses:

  • Put big charges on credit cards. If you travel outside the U.S. a lot, consider getting a Capital One card, with its zero surcharge (and a reasonably generous reward program). Otherwise, AmEx, with its two-percent surcharge, is a pretty good deal, and even cards with a full three-percent surcharge are still an efficient way to pay outside the U.S.
  • Use your debit (ATM) card for whatever local currency you need. If your itineraries permit, use one of the limited no-fee systems. Otherwise, minimize your losses by withdrawing in fairly large amounts each time. Avoid using Bank of America in countries where you can’t find Global ATM Alliance ATMs.
  • Avoid dynamic conversion, which potentially can increase your losses and provides no counterbalancing advantages.

In short, keep using plastic, but make sure it’s the right plastic.

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