Paris Practicalities: Tips to Avoid Bank Fees Abroad

In the "Paris Practicalities" series, I lay out some basic advice for the foundation of a trip abroad for the well-informed and savvy traveler.

I’m kicking off the Paris Practicalities series with the scoop on how to access your money abroad and avoid unnecessary bank fees in the process. I imagine you think like me in the sentiment that your hard earned dollars should not be snatched from you by big banks and corporations by complicated fees and surcharges. 

So how do you access your money in Europe without a greedy middle-man? Here’s what you need to know before you go and while you are away:

[Note: This post comes from the perspective of an American traveling to Europe but the basic principles can be applied to other situations.]

Before you leave: 

You don’t need to exchange money before your trip. 
You really don’t - everything you pay for at the airport will be in your home currency until you arrive in Europe. At which point you can get to an ATM.

But...If you really would feel more comfortable having some euros on hand before boarding the plane, you can contact your bank in advance to get some foreign currency. If you don’t plan ahead, then the bank often won’t be able to provide this service.

You should always do a search on Google to see what the USD to EUR exchange rate is to have a baseline to set expectations. The bank’s rate should be within 4%.

For example, if you want to buy 100 Euros:
1. Search on Google for 100 EUR in USD.
2. The result should be somewhere around $140 (as of May 2014 €1 = $1.37 ).
3. The rate your bank gives you should be within 4% (approximately $6) of that rate, or no more than $146.

I should stress to buy euros (if you must) at your bank and not elsewhere. I've overpaid significantly a few years ago at my local AAA. And never exchange your dollars for foreign currency at a money changer - you will certainly not get a good rate (more on this later).

Inquire with your bank on what fees to expect when traveling.

  • Credit cards usually charge a flat percent on each transaction. Consider getting a credit card that charges a 0% fee for international travel if you don’t have one already. See Nomadic Matt’s blog post for a great list of cards with no international fees.
  • Another item to consider with credit cards is if yours is likely to be accepted in Europe. Know that American Express is often not accepted at shops and restaurants. (Nothing against Americans - Amex charges a high fee for businesses that most vendors here do not want to pay.) Mastercard and Visa are widely accepted; Discover cards are less commonly accepted in Europe.
  • Ask your bank about the charges to use ATM’s abroad. Most banks charge a fixed fee and a flat percentage when money is withdrawn (for instance, a $5 charge each time you use an ATM plus 1% of the sum you are withdrawing). Some banks have partner banks abroad and will waive the fixed fee. For example, my Bank of America debit card waives the fixed fee at any BNP Paribas in France, so I only use ATM’s from that bank with my Bank of America debit card.
  • If you’re a US resident, consider an account with Schwab. This bank promises no ATM fees, period.

Also be sure to give your bank the dates when you will be traveling and which countries you will be visiting to ensure your card is not flagged for suspicious activity.  

Once you arrive: this is the order of preference on how to pay for things:

  1. Use your credit card for as much as you can.
  2. Pay with cash by using your debit card at an ATM when your credit card is not accepted. 
  3. Have some of your home currency on hand as a last option in case of emergency, in which case you can go exchange it.

1. Use your credit card for as much as you can.

  • When you make a purchase, always choose to pay in the country’s currency (ie euros, pounds, etc), NOT American dollars. The vendor usually charges 3% more than your credit card’s currency conversion rate -- and then your credit card will still tack on their own “international” fees (if your card charges a percentage in fees).
  • You may need to explain how to use an American credit card with the machine (to swipe the card) because most people are accustomed to European credit cards that have the chip-and-pin (card is inserted in the bottom of machine and a pin code is entered on the keypad). If you see a confused look, just jump in and motion how it’s done. 

2. Pay with cash by using your debit card at an ATM when your credit card is not accepted. 

  • If your bank partners with a local bank branch (see the “before you leave” section), seek out those ATM machines to withdraw cash.
  • Always take out money from a large bank branch’s ATM. Random small ones tend to give worse exchange rates and have higher fees. 

3. Have some of your home currency on hand as a last opinion in case of emergency, in which case you can go exchange it.

  • Money changers are a huge rip-off. It's never a good method to change money. Especially never change money at the airport - you will be donating money needlessly to the middle man! 


And just a few more notes...

  • Do take out some cash from an ATM to have a back up if credit cards are not accepted. In smaller restaurants and little shops, especially in places outside of big cities, it’s not uncommon for places not to accept credit cards (to avoid vendor fees). If you are traveling to Germany, credit cards are often not accepted - anywhere. Even in large electronic stores. (Found that one out from personal experience. I’m talking about a place in Stuttgart selling flat screen TV’s...all in cash apparently.) 
  • It’s a good idea to have two debit cards and two credit cards just in case. It’s good to have a back-up in case one gets lost or stolen. I've also been witness to two incidents where a debit card was eaten in an ATM, even after the home bank was called and informed of travel details ahead of time. Both times, in Paris, the local bank branch had no way of retrieving the debit card from the ATM...end of story. So have a back-up just in case!
  • Understand if you have withdrawal limits on your debit card - meaning, how much money you can withdraw in a day/week. Michael and I unknowingly met our withdrawal limit for the week while in Prague, where we had to pay for many things in cash. Thankfully we were able to easily finish out one more day in Prague on about $20 USD, and not leave hungry in the least. 


Remember these tips so you can spend money on yourself while you travel, instead of giving it away to the banks!

Do you have any advice or tips to add?