How to Avoid Banking Fees While Traveling Abroad

You’re relaxing at a Parisian café, croissant in hand, when your phone buzzes—twice. First comes a notification of a foreign transaction fee on the coffee you just paid for, then an alert about a $5 ATM charge from withdrawing cash earlier.

Suddenly, that sweet breakfast leaves a bitter aftertaste. We’ve all felt the sting of unexpected banking fees while traveling.

For budget travelers, these extra charges can quickly pile up and eat into your adventure funds.

But fear not – with a bit of savvy planning and the right tools, you can dodge those fees and keep your money for actual travel experiences. Let’s explore the common fees lurking abroad and how to outsmart them in a friendly, storytelling fashion.

ATM Withdrawal Fees

ATMs abroad are notorious for nickel-and-diming travelers. Every time you withdraw cash, you could be hit twice: once by the local ATM operator and again by your own bank.

The local bank’s ATM might levy a flat fee (often in the range of about $3–7 per withdrawal), and your home bank could slap on a foreign withdrawal fee of around 1–3% of the amount .

For example, taking out the equivalent of $100 might trigger a $5 local ATM fee plus a few dollars more from your bank – ouch! These charges can add up fast if you make frequent small withdrawals.

Why it happens: Banks charge these fees for the service of using another bank’s ATM and for currency conversion. It might seem small per transaction, but a few dollars here and a few percent there can snowball over a long trip . The good news is there are ways to minimize or eliminate ATM fees.

How to avoid ATM fees:

Use partner ATMs or global networks: Many large banks are part of international alliances that waive ATM fees for each other’s customers. For instance, banks like Bank of America, Barclays, Deutsche Bank, and others formed the Global ATM Alliance – allowing their cardholders to use partner ATMs abroad with no withdrawal fee . If your bank is in such an alliance, stick to those ATMs to get cash without the extra charge.
Choose a bank that reimburses ATM fees: Some banks and credit unions simply refund any ATM fees you incur worldwide. For example, Charles Schwab in the US offers a debit card that rebates all ATM fees at month’s end, and digital banks like Starling, Monzo, Revolut (in Europe) or Chase (UK) also eat those fees for you . With these, you can grab euros in Paris or dollars in Bangkok and get a full rebate on the ATM charges – cha-ching!
Limit the number of withdrawals: If you can’t avoid a fee, at least reduce how often you pay it. It’s usually smarter to withdraw a larger amount of cash once than to make many small ATM trips. This way you pay the flat fee only once. (Of course, stay aware of safety and don’t carry too much cash on you at once.) Pro tip: If your bank has a cap on fee-free withdrawals (for example, some cards offer the first few withdrawals free and then charge a percentage ), plan accordingly and take out enough to cover several days.
Decline conversion at the ATM: Often, foreign ATMs will ask if you want to be charged in your home currency. This is a trick called dynamic currency conversion – more on that later, but at an ATM it usually means the machine is doing the conversion at a poor rate. Always choose to be charged in the local currency at the ATM; your home bank or card network will likely give a better exchange rate .

By using these tactics, you can significantly cut down or even eliminate ATM withdrawal fees. There’s nothing more satisfying for a budget traveler than seeing “$0.00 ATM fee” on the receipt!

Credit Card Foreign Transaction Fees

Credit and debit cards are super convenient abroad – until those foreign transaction fees hit. Many standard credit cards will tack on an extra charge of around 3% for each purchase made in a foreign currency .

It might be phrased as an “international service assessment” or just rolled into the transaction total on your statement. 3% may not sound like much, but imagine: on a $500 hotel bill or a week’s worth of dining out, that’s an extra $15 lining your bank’s pockets for no good reason. For a budget traveler, every bit counts.

The scenario: Let’s say you’re backpacking through Thailand and pay for a ₿1500 (~$45) cooking class on your credit card. If your card has a 3% foreign fee, you’ll incur about $1.35 in fees. Do that multiple times a day, and by trip’s end you might have donated tens of dollars to your bank just for the privilege of currency conversion. Not fun!

Strategy to avoid foreign transaction fees: The simplest fix is to carry a card that doesn’t charge these fees. Nowadays, there are plenty of options:

Travel-friendly credit cards: Many issuers offer cards with no foreign transaction fees as a perk. For example, in the US, popular travel cards like the Chase Sapphire Preferred or Capital One Venture have 0% foreign transaction fees . This means you pay exactly the price on the tag in local currency converted to dollars, with no extra percentage added. These cards often have the added bonus of reward points or cash back on travel spending, essentially paying you to travel.
Global digital banks and debit cards: In Europe and other regions, digital banks such as Revolut, Monzo, N26, or Wise offer debit cards that let you spend abroad with no foreign transaction fees and near-perfect exchange rates . Even if they’re not credit cards, using these fee-free debit Visa/Mastercards for purchases can save that 3% surcharge.
Credit unions and specialty banks: Don’t overlook smaller institutions; many credit union cards or online bank cards also waive foreign fees to stay competitive. For example, some credit unions in North America have travel cards with no fees, and banks like Schwab or Capital One 360 debit also charge 0% on international purchases.

Remember, always pay off your credit card balance on time when traveling. While it’s great to avoid foreign transaction fees, carrying a balance and paying high interest will wipe out those savings quickly.

Use the card for convenience and protections, but try to pay the statement in full. That way, you get all the fee-free benefits without any debt hangover. As a bonus tip, check if your card offers travel perks like travel insurance, lounge access, or rental car coverage – using a card smarter can save you money in other ways too.

The Dynamic Currency Conversion (DCC) Trap

If there’s one fee trap that catches even experienced travelers off guard, it’s Dynamic Currency Conversion, or DCC. You’ll encounter this sneaky offer at many shops, restaurants, and even ATMs abroad.

It usually goes like this: “Would you like to be charged in your home currency?” It might sound convenient – you instantly see the price in USD, GBP, or whatever your home currency is – but beware! This is almost always a bad deal.

Why DCC is bad: If you agree to be charged in your home currency, you’re letting the foreign merchant or ATM set the exchange rate (often a worse rate than the market rate) and sometimes tack on their own conversion fee.

In short, you’ll be overcharged compared to what your bank or credit card network would give you . It’s essentially an extra hidden fee. In fact, travelers have found cases where saying “yes” to DCC cost them an extra 5% or more on the transaction – an unpleasant surprise on your statement.

Real-world scenario: Imagine you’re in London buying a souvenir for £50. The cashier swipes your card and asks if you want to be charged in USD. If you say yes, their card terminal might apply a poor exchange rate (let’s say it turns £50 into $70, when the true market rate would have been $65) and possibly add a service fee.

You leave thinking you paid $70. But had you chosen to pay in local currency (GBP), your bank would later convert it at the true Visa/Mastercard rate – perhaps you’d end up paying only ~$65, saving $5. That $5 difference was pure padding that the DCC would have skimmed from you.

How to avoid the DCC scam: It’s simple – always choose to pay in the local currency of the country you’re in. Whether at an ATM or a store, if prompted to select currency, opt for the currency of that country, not your own.

By doing so, you let your card network (Visa, Mastercard, etc.) handle the conversion at the fair rate. Indeed, if you decline DCC, you’ll typically get a rate very close to the actual market exchange rate for that day . So if you’re asked, “Pay in USD or EUR?” while in France – pick EUR. If it’s “USD or JPY?” in Japan – pick JPY. Every time.

Sometimes the machine’s phrasing can be confusing (they might frame it as “Lock in a guaranteed rate in your currency now?” – which is really a guaranteed bad rate). Stay alert and hit “Decline” or “No” for conversion offers. Your future self, reconciling your receipts, will thank you when you see you avoided an ugly markup. In summary: local currency = good, home currency = costly trap .

Beating Exchange Rates and Money Changers

Another wallet-drainer abroad can be currency exchange markups – the kind you encounter at airport exchange counters or touristy money changers. The rates advertised often include a hefty commission or a poor exchange rate that favors the exchanger.

You might also see signs like “No Commission” at kiosks, but beware: they usually make up for it with a worse rate. For example, swapping money at a random booth might quietly cost you 5–10% more than the actual market rate, turning your $100 worth of currency into maybe $90 worth after conversion.

Smart moves to get the best exchange rates:

Avoid airport and hotel exchanges: Airport exchange counters are convenient, but they notoriously offer some of the worst rates . If you need cash right away on landing, exchange only a small amount (enough for a taxi or immediate needs) and wait to do the bulk of your exchanging later. Often, you can get a decent rate at ATMs or in town at a bank.
Use ATMs or local banks: In most cases, withdrawing cash from a bank ATM in your destination gives you a much better rate than a street exchanger. ATMs tap into the global interbank rate (the true exchange rate), so even if you pay a small ATM fee, you may still come out ahead compared to a lousy rate at a kiosk . As noted earlier, try to use ATMs connected to reputable banks and decline any on-screen conversion offers.
Carry a little emergency cash: It’s wise to bring a small amount of the local currency or a widely accepted currency like USD/EUR as a backup. You can get some foreign cash from your home bank before you travel – many banks will order in currency for you at a fair rate if you plan a week or two ahead. Having, say, €100 or $100 worth of local money on hand can cover immediate expenses if you land late at night with no open ATMs. Just avoid exchanging large sums at once without shopping around for a good rate.
Compare rates with an app: Knowledge is power. Use a currency conversion app like XE or Oanda on your phone to check the real mid-market exchange rate in real time. This way, if you do go to an exchange office, you can calculate roughly what you should get. If the deal is dramatically worse than the app’s rate (which it often will be at airports), you know you’re losing money. For instance, if XE says 1 USD = 0.90 EUR and the counter offers 0.82 EUR, that’s a big difference – you’re better off seeking alternatives. A quick rate check can save you from bad deals .

By being picky about where and how you exchange money, you’ll keep more of your hard-earned travel budget. Often the best strategy is a mix: use a fee-free card for most purchases, and withdraw cash in moderate amounts from ATMs as needed. This one-two punch gives you good exchange rates via the card network and minimizes fees, without having to carry wads of cash.

Tools and Cards to Save the Day

Thankfully, we live in an age of financial technology tailor-made for travelers. A number of apps and multi-currency accounts have emerged to help globetrotters manage money cheaply across borders. If you haven’t already, consider adding one of these travel-friendly financial tools to your arsenal:

Wise (formerly TransferWise): Wise offers a “borderless” multi-currency account that lets you hold and convert between 50+ currencies at the real mid-market exchange rate, for a tiny fee. You get a debit MasterCard linked to the account, so you can spend directly in the local currency from your balance (or withdraw cash from ATMs) with no sneaky markups . For example, you can transfer dollars to your Wise account, convert $100 to euros in the app at the true rate for a fee of maybe $0.40, and then when you use the card in Europe, it deducts from your euro balance with no additional charges. It’s a game-changer for avoiding both foreign transaction fees and bad exchange rates.
Revolut: Revolut is another popular app-based account that supports multiple currencies. It allows you to exchange currency in advance at interbank rates and spend on a Visa card that automatically uses the local currency balance. Revolut offers a free monthly exchange limit (for instance, you might exchange up to a certain amount with no fee) and then a small percentage fee beyond that. They also have perks like fee-free ATM withdrawals up to a monthly limit, budgeting tools, and even cryptocurrency and stock trading in the app for those so inclined. Heads up: Revolut may have weekend surcharges on currency exchange (since markets are closed), but for most travelers it still beats the rates and fees of traditional banks.
Digital bank accounts: Apart from Wise and Revolut, many online banks are excellent for travelers. Monzo and Starling (UK), N26 (EU), Chime or Capital One 360 (USA) – these are examples of accounts that prioritize low fees and good exchange rates. Monzo, for instance, uses MasterCard’s exchange rate with no added fees on foreign transactions and allows free ATM withdrawals abroad up to a limit . These fintech banks often come with intuitive apps that send instant notifications (so you’ll know immediately if a fee was charged) and let you freeze/unfreeze cards if lost, which is great for peace of mind on the road.
Currency converter apps: We mentioned XE earlier, and it’s worth highlighting as a tool. It works offline too, using the last updated rate, so even if you have no data signal you can still do a quick conversion at a street market to check prices. Other apps like Currency Converter Plus or Google’s currency tool can do the job as well. They might not save fees directly, but they empower you with information – which can prevent you from agreeing to a bad rate or suspect fee.
ATM locator and bank apps: Some banks have partnerships abroad – for example, a U.S. bank might waive fees if you use a certain foreign bank’s ATMs. Before your trip, check your bank’s website or app for an “ATM locator” or list of international partners. There are also third-party apps that show nearby ATMs and even indicate if they charge fees. Spending a few minutes to locate a fee-free ATM can save you $5 each withdrawal – not a bad return on investment!

Final Thoughts

Traveling on a budget doesn’t mean you have to accept a ton of extra banking fees as a fact of life. A little knowledge and preparation go a long way. The croissant tastes much sweeter when you know you’ve avoided needless fees and kept your travel budget intact.

In summary, remember these key takeaways for fee-free adventures:

Plan your cards – Carry at least one credit or debit card with no foreign transaction fees for purchases , and consider a backup in case of emergencies.
Use smart ATMs – Withdraw cash from ATMs strategically: use bank networks or cards that refund fees , and take out bigger amounts less frequently to minimize per-transaction costs.
Always choose local currency – Whether at an ATM or paying by card, decline dynamic currency conversion offers. Let your bank or card handle the conversion at the fair rate, not the merchant’s padded rate .
Leverage fintech – Take advantage of modern travel-friendly accounts like Wise or Revolut that offer near-perfect exchange rates and low fees for spending abroad . Use apps like XE to stay informed of rates .
Avoid costly exchanges – Steer clear of airport and hotel money changers with poor rates . When you do need local currency, use an ATM or a reputable bank, and know the rate ahead of time if possible.

After all, every dollar saved on fees is a dollar you can spend on a memorable experience – be it an extra street food treat, a museum ticket, or a night in a hostel with new friends. So go forth, travel smart, and make your money work for you across borders.