Cost effective ways of banking overseas.
Withdrawing money from an ATM abroad or paying with your US credit card when traveling outside of the US can cost you some big bucks. Between ATM withdrawal fees and foreign transaction fees, you can rack up a few hundred dollars during your trip. When you withdraw local currency from a foreign ATM, the owner of the ATM can charge you anywhere between $1 and $5 for the transaction, and besides that, your bank in the US may charge an additional 1 to 3%. Similarly, when you use your credit or debit card at a store outside of the US, your bank may charge you a foreign transaction fee for that purchase. These transaction fees and commissions can rack up easily, and having the right bank and the right credit card can save you plenty when traveling abroad as well as for expats.
Transactions fees are not the only thing to consider when choosing a bank while either traveling for extended periods of time or moving abroad. The exchange rate used by the bank to convert your foreign purchases and transactions to US dollars, charges for wire transfers, monthly maintenance fees on your account and the minimum balance required are all important issues to take into account when opening a bank or credit card account in the US when you either live abroad or plan to travel.
We have done extensive research on the best banks to do business with when you live abroad and have found that the top 3 banks to serve US expats are:
Capital One 360. When using an ATM overseas, Capital One 360 charges no foreign transaction fees. While this alone would be a great reason to do business with this bank, Capital One also provides competitive exchange rates, much more favorable than those charged by local banks on money exchange. Additionally, Capital One 360 charges no monthly maintenance fee and has no minimum balance requirements. The credit cards provided by this bank also have favorable terms (see more information below).
Charles Schwab Bank. Just like Capital One 360, Charles Schwab doesn’t charge a foreign ATM withdrawal fee, however, the bank goes a step further and offers customers a reimbursement of any ATM fees charged by the local bank’s ATM. Schwab doesn’t charge a monthly account maintenance fee and has no requirements for minimum balance. The only downside to Charles Schwab accounts is that they provide no ability to do international wire transfers. In order to open a bank account at Charles Schwab, customers are required to open a brokerage account as well.
HSBC Bank. HSBC has quite the global coverage, making its value proposition incredibly appealing to US expats. With presence across the globe, HSBC enables customers to open bank accounts in several different countries , an attractive feature for globe-trotting customers. Customers who have multiple HSBC accounts in different countries can transfer funds via wire transfers at no cost. As opposed to Charles Schwab and Capital One which are online banks, HSBC is an attractive choice for US expats living in a country in which HSBC operates.
Now let’s move on to the credit cards. Choosing a credit card is subject to a different set of criteria. Things like foreign transaction fees, exchange rates, account maintenance fees and rewards programs are some of the things you must take into consideration when selecting the right credit card for you.
The top three credit cards worth looking at are:
Chase Sapphire Preferred. This credit card has an outstanding rewards program and not only we say that, but Kiplinger’s Personal Finance named it the best credit card for flexible travel redemption in July of 2016. During the first three months after opening a Chase Sapphire Preferred card, customers can enjoy additional bonus points. While this credit card charges no foreign transaction fees, it does have an annual fee of $95 from the second year onward.
Capital One Quicksilver. This outstanding credit card charges zero foreign transaction fees, has no annual fee and offers an enviable rewards program, albeit not as good as that offered by Chase Sapphire. If customers ever lose their card or the card is stolen, Capital One’s zero liability policy offers them superb fraud coverage. The Quicksilver card is available as a MasterCard only.
Capital One VentureOne. While the benefits offered by this card are pretty much the same as those offered by the Capital One Quicksilver card, the VentureOne is only available as a Visa.
Conclusion:
Selecting the correct bank and credit card can mean the difference between big spendings or big savings. While Capital One offers great benefits on both bank account and credit card for the typical expat, depending on a consumer’s individual situation, mixing one bank’s credit card with another financial institution’s credit card may be more favorable.
