How to Use a Foreign ATM Without Paying Crazy ATM Fee
I am going to walk you through the things you need to know in order to avoid paying a crazy ATM fee whenever you use a foreign ATM machine. There are at least four ways that you may end up paying fees when you use foreign ATM machines. I start by describing the different types of ATM networks to help you find a foreign ATM that works with your debit/bank/credit card. Use a network ATM, and your chances of avoiding fees increase. I then explain how the owner of the ATM may charge you a fee, how your card issuer may charge you a fee, and how you may be paying a secret/hidden fee because you were given a poor quality currency conversion rate.
ATM Networks That You Need To Find In Order To Lower The Chances Of You Being Charged A Fee
Start with the basics, which is finding the right ATM. If you do not have the correct card for the correct ATM, then there is a chance that the card will not work in that ATM, and there is a larger chance that your card will work but that you will have to adjust to paying a crazy ATM fee.
The card you are using is probably linked all over the world. Visa, MasterCard and Maestro are known around the world. The financial computer system that links global ATM networks is called the interbank network. It allows you to conduct similar transactions at any ATM within the network. If you see these names or logos on an ATM, then there is a good chance you can use it.
PLUS Network (Visa)
This interbank network covers all types of Visa card. This network is located in 200 territories and countries around the world. You probably know it because it is very popular in the USA and in Canada. They are found all over the world, which includes in remote areas of Indonesia and India.
Cirrus Network (Maestro and MasterCard)
You will find the Cirrus interbank network in 93 countries, and it is operated by MasterCard. You may use MasterCard, Diners Club and Maestro cards if you see the Cirrus Network logo. The places where the Cirrus Network are so popular are Venezuela, United States, Chile, Saudi Arabia and Canada. If you are in Bangladesh and India, then the Cirrus interbank network serves people as the international and local interbank network.
Maestro Network (Mastercard and Maestro)
Maestro is operated by MasterCard and it is a multi-national debit card service. Maestro is the main brand that MasterCard has in Europe. Oddly enough, if you use a card that says Maestro on it, then it will be passed through the Cirrus network and not the Maestro network. However, you may still see the Maestro logo on ATMs.
Star is best known in the United States. It is the largest interbank network in the USA, and it has 5700 financial institutions and banks signed up with it, and it services more than 2 million ATM machines in the USA.
You may have heard of the NYCE network if you live in Canada or the USA. If you live in the USA, then their ATMs are located mostly in the Northeast and the Midwest. NYCE stands for New York Currency Exchange.
Interac Network (Canadian banks)
The interbank network that connects Canada’s biggest banks is known as the Interac interbank network. There are 80 members of this interbank network and there are over 59,000 Interac network ATMs in Canada.
You do not need to be aware of these networks, but they may come up if you are traveling. It is best to get in touch with your credit card, bank card or debit card issuer to find out if there are network ATMs in the country you are visiting. These are some of the networks you may hear about when you are traveling:
- LINK in the United Kingdom
- Pulse in the U.S.A.
- China’s Union Pay
- Girocard in Germany
- Groupement des Cartes Bancaires CB in France
- Yucho in Japan
The Owner Of The ATM May Charge You A Fee
Even if you find a network ATM, and even if your card issuer doesn’t charge a fee, and even if there are no currency conversion fees or rate-skimming, you may still be charged a fee, and you may be charged it by the person who owns the ATM. The owner of the ATM is usually a bank or financial institution, but it may also be a person or a small business.
It is not in the interest of the ATM owner to charge you a fee for using an ATM that would otherwise be free. The whole point of having free or cheap ATMs is to entice people to use your services. However, there are times when the owner may decide to add a fee to a specific ATM in a specific location.
The most common reasons for this extra fee on single ATMs are reasons of convenience. If theirs is the only ATM for miles, then they know people will be willing to pay their shitty money-grabbing fees. I have seen them at tourist locations where they are the only ATMs for miles and people are queuing up to pay their fees.
Avoiding these fees is sometimes difficult. Check the local stores to see if they do cash back. Make a sacrifice and maybe do not use the ATM, or search out other ATMs that are not too far away. Do not go too far out of your way, but I personally like to avoid these sorts of ATMs at all costs because I think they are very money grabbing. At least when you pay to use a toilet you are paying for the upkeep of the facility, but when you pay ATM fees on top of all the other fees you are already paying, then it is unfair to think you are being charged for access to your own money.
The Card Issuer May Charge You A Fee
Some credit cards, secured cards, debit cards, bank cards, and financial institution cards will charge you a fee because you are using your card outside of your own country. There is really no reason for the fee other than the fact that the card issuer decided to add it.
Some claim that there are administration fees to pay, but for the most part it is a case of the card issuer charging a fee because the card issuer decided to. For example, Transferwise Borderless goes half way and lets you draw out $200 from your account before it starts adding fees on.
Other banks, will charge you a transaction fee for withdrawals, and some will even charge you for checking your balance. By the way, being charged to check your balance is one of the uglier ways that a money-grubbing company will try to take your money from you. We have tried and tested a few secured credit cards and found the most outrageous fees for checking balances. Try to avoid these types of cards at all costs because if they are willing to charge you for something as innocent as checking your balance, then there are probably screwing you over in other ways that you haven’t realized yet.
The Card Issuer May Charge You A Conversion Fee
Unless you have something such as a PayPal Access card with the local currency as a balance, or you have a Transferwise Borderless with the local currency as a balance, then you are probably going to have to have your currency changed from US dollars to the local (foreign) country. You may worry about the fees and how much the conversion will cost, but do not worry too much about the mechanics of the situation. When you draw money from a foreign ATM, your card issuer converts your dollars into the local currency for you. The same is true when you spend money in another country in a shop or restaurant, in those situations, the money is taken from your bank account or credit card, it is converted into the local currency, and it is sent to the merchant.
Being charged a conversion fee is not so bad because it can sometimes save you a lot of money. You need to be extra cautious when a company/bank says it doesn’t charge conversion fees.
Companies and banks have to make their money some way or another, and if they are not charging conversion fees, then they are probably going to skim from your rate. Skimming from your rate is explained in the next section, suffice it to say that you should remain skeptical when a company or bank says that it doesn’t charge a conversion fee.
Companies such as CurrencyFair and Transferwise Borderless will charge you a fee to convert your money from US dollars to whatever your currency is. However, the conversion rate you get is the same as the market rate, which is the same rate you see on Google, Bing and XE.com. Plus, if you opt for a Transferwise Borderless account, you may keep a balance in whatever currency you wish (most currencies), which means you won’t have to convert your money at all.
Either your bank or credit card will charge you a fee for conversion, or you use the Transfewise Borderless card and pay between 0.35% to 1% for your conversion. Or, you pick a bank or credit card that says it doesn’t charge a conversion fee, and instead you pay more by having your rate skimmed (which is explained below).
Currency Conversion Rate Skimming – The Hidden ATM Fee
If a company claims that it doesn’t charge a conversion fee when you draw money from a foreign ATM, then you are probably going to pay a hefty hidden fee by the way of rate skimming. This is where a company or bank gives you a currency conversion rate that is less than the market rate so that they may pocket the rest.
For example, CurrencyFair and Transferwise give you the market rate and charge a fee. Here is what you pay when you draw out £100 GBP (UK Money) from your US dollar balance.
You draw out £100 from a Great British ATM
The market rate is £0.70 per $1.00
It costs you $143 with the market rate
Plus the conversion fee of 1% ($1.43)
Total amount is approx $145 for GBP£100
Let us compare that with a bank or a credit card that skims from the rate. This company or bank doesn’t charge a conversion fee, but they give you a currency conversion rate that is worse than the market rate.
You draw out £100 from a Great British ATM
The bank/credit card rate is £0.65 per $1.00
It costs you $154 with the bank/credit card rate
Plus the conversion fee of 0% ($0.00)
Total amount is approx $154 for GBP£100
As you can see, the bank/credit card doesn’t charge a conversion fee, but they also give you £0.05 less per dollar, which ends up costing you $9 more. That is only an example of how a bit of rate skimming (giving you a lower conversion rate) may result in you paying more for your ATM withdrawal. Imagine if you were on vacation in Yorkshire in England and you were only give $0.65 per $1.00, and you were drawing out £900 per week. You would be paying far more for your ATM withdrawals than you have to.
You also have to be careful of how some credit cards and banks hide their conversion skimming. For example, some will give you the market rate up to a withdrawal of $200 in a month. They will go around shouting about how they charge no conversion rate and how they offer you the market rate. Then, when you withdraw more than $200, they give you a lower conversion rate and you end up losing tens and maybe hundreds of dollars every time you use an ATM in a foreign country.
Conclusion – Paying A Crazy ATM Fee Is Not A Forgivable Evil
There are four ways you may end up paying fees when you use foreign ATM machines. Using an ATM that is part of your card issuer’s network is a big plus. The owner of the ATM may charge you, your card issuer may charge you, and you may pay a hidden fee by the way of a poor currency exchange rate.
You may be tempted to forget the crazy ATM fee and let it slide because you are on holiday and they are one-offs, but there is no need to give your money away needlessly. With just a small amount of research, you can find a way to avoid paying ATM fees or severely reduce foreign ATM fees.
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If you travel abroad more than once per year, then get yourself a Transferwise Borderless account because it is just like having a foreign bank account without the fees and commitments. It is little like having an online account such as Google Wallet, Skrill, PayPal, etc., but the card you use is treated like a regular national card by most of the ATMs you encounter. Plus, Transferwise gives you a market rate when you make your currency exchanges, and you can leave different currencies in your balance so that you may use them the next time you visit the country, or you can convert and withdraw them as needed.