If your debit (or credit) card charges you a foreign transaction fee, it may be time to reconsider your card (or bank). There are plenty of financial institutions that don't charge fees for using you money in another country. Regardless of what card you use, consider letting your bank know before you depart to avoid inconvenient fraud alerts and frozen accounts.
Frequently asked questions about debit cards and foreign transaction fees
Before we start our dive into debit cards for traveling abroad, consider getting a travel credit card
. They are typically safer, and you can earn hundreds of dollars in rewards. One big benefit is it’s easier to dispute a foreign credit card charge than a debit card. Credit cards let you review your purchases before paying your bill. Debit cards allow businesses to withdraw funds directly from your account. It’s harder to dispute payments when they already have your money.
Why should you compare debit cards for traveling overseas?
Here are the top seven reasons all debit cards are not created equal when it comes to international travel.
1. Domestic vs. international travel
Some debit cards don't support international transactions. Even those that do are not always set up to do so efficiently. Some cards repeatedly experience declined transactions because the company suspects fraud, while others have terrible customer care and are hard to access from abroad.
2. ATM fees
ATM fees can add up quickly. When traveling, you don’t want to carry too much money around with you for security reasons, but you don’t want to pay a bunch of fees to take out small amounts either.
Being so, you’ll need a card that makes it easy and affordable to access your money. There are two types of ATM fees; ATM transaction fees and out-of-network ATM fees. It’s best if you don’t have to pay either!
Note: Financial institutions that are part of the Global ATM Alliance allow you to use international ATMs without additional fees.
3. Foreign purchase transaction fees
Another red flag to look out for is a debit card that charges foreign transaction fees. A foreign transaction fee is an amount that is charged any time you use your card outside of your home country or with a merchant who charges in a foreign currency. If you use your debit card to make purchases throughout your trip, these fees can add up quickly.
4. Currency conversion fees
Your bank may also charge a conversion fee when you purchase in another currency, and the bank has to convert it to USD. The fee can be per conversion and/or a lower conversion rate than the actual rate, costing you more.
5. Security and fraud protection
Next, it’s important to choose a card that offers increased protection against fraud, such as an online security program, microchip technology, and/or zero liability. You are at greater risk when outside your home country, so you want to prevent your card from getting compromised. Further, ensure you won’t be held responsible for fraudulent charges.
6. Extra features
When you choose a card designed for travel, you may be able to take advantage of additional benefits such as travel insurance, rental car insurance, TSA Global Entry, etc. Standard debit cards designed for everyday use don’t usually include these features.
7. Online access
Lastly, when you’re overseas, you won’t be able to walk into a branch to manage your money. Being so, it’s important you can manage your account online via a website and/or mobile app—the more tech-savvy the company, the better. Look for mobile apps and websites that allow you to view transactions, deposit checks, transfer money, pay bills, and more.
Shop around before taking off
It’s important to shop around for a debit card that is designed for traveling overseas. Imagine that you just landed in Italy, and you go to dinner, which ends up costing the equivalent of about $100. If you have a debit card that charges a foreign transaction fee, that will typically cost $3 to $5, depending on if your card charges a 3% or 5% fee. After a week on vacation, these fees can get expensive.