Avoiding Foreign ATM Fees

I rarely take out money when abroad, as I try to keep all my purchases on credit cards. Since I’ve always had accounts that levied steep fees for ATM withdrawals, I’ve always exchanged money in advance of my travel. Unfortunately, you generally get rates between 1.5-5% less than the interbank/market rate depending on the establishment you frequent. Recently, I’ve dug into a few bank accounts that are quite useful for travellers who want to save when converting currency.

In terms of credit cards, the only products that do not incur foreign exchange fees are issued by Chase Canada. These include the Chase Marriott Visa and Amazon Visa, and I highly recommend them for anyone who currently are paying forex on their purchases abroad.

Chase Canada Marriott Visa

Chase Canada Marriott Visa

Avoiding foreign ATM fees when withdrawing cash is a different story. While credit cards max out at 2-3% in forex surcharges, you can get hit heavily when taking money out overseas.

Foreign Bank Fees

There are three main fees that you pay for an international withdrawal at a non-affiliated ATM. Your bank will charge you a fee for making an international withdrawal, and also potentially a foreign exchange fee. The ATM machine may also charge you a additional fee for using their terminal.

Bank Withdrawal Fee + Foreign Exchange Fee + ATM Fee

With the Big 5 Banks in Canada (BMO, TD, CIBC, RBC, and Scotia), most of their standard checking accounts have a $5 fee associated with Foreign ATM withdrawals, as well as a 2.5% foreign exchange fee. If you add another $3 fee from the ATM machine, you’re losing about 13% for every $100 withdrawal, an insane cost to get your own money out of the bank.

The best option with the major banks is Scotiabank, a member of the Global ATM Alliance. While coverage isn’t complete around the world, you’ll at least save when using the member bank’s ATM’s in places like the UK, the Caribbean, Oceania, and the US. You also have access in parts of Europe, Africa, and South America. If you have a Scotiabank Account, the Bank Access and ATM machine fees are waived, but you still incur the 2.5% forex fee.

This is also the case with top-tier All Inclusive/Premium plans. Even though they trumpet no-fee ATM withdrawals, the fine print in their terms and conditions mention that all foreign currency transactions (including international withdrawals) are subject to a 2.5% fee. While you do end up saving the ATM access fee, the extra dollars you’re paying is especially unfavourable with withdrawals in large amounts.

Alternative 1: Tangerine Checking

Tangerine Checking

Tangerine Checking

The best bank account in Canada to have for foreign withdrawals is with Tangerine, a direct bank with limited brick-and-mortar retail presence. There are no fees and no minimums on the account at all, since they aren’t a full-service bank. However, since they are owned by Scotia, customers get to tap into the worldwide network without having the accompanying maintenance fees and surcharges. It’s a fantastic loophole for those in the know (which you are now!).

Tangerine Refer-A-Friend

Tangerine Refer-A-Friend

The best part is that they’re also offering a Refer-A-Friend Bonus with a free $50 cash bonus for signing up for an account and depositing $100, if you use my signup code 44499869S1 (otherwise you receive nothing). You must put in the Orange Key referral code during the signup process. Otherwise, you won’t receive the bonus.

Inserting Orange Key

You’ll receive the referral bonus as soon as you deposit the funds in the account. The bonus showed up for me quite quickly – in one calendar day! It’s probably the quickest bank account bonus that I’ve ever seen.

$50 Tangerine Bank Account Bonus

$50 Tangerine Bank Account Bonus

With an international ATM withdrawal that’s non-network, there’s a flat $2 fee. While painful, that’s still better than most banks. Do note that this card runs on the Cirrus/Interac networks and not Visa/MasterCard, so acceptance may also vary. I’ve listed here all the members of the Global ATM Network.

Global ATM Alliance Members

Global ATM Alliance Members

For some people, this will suffice as you can get American/Australian/New Zealand dollars, Pounds, Euros, and a variety of other currencies fee-free. However, for those who do want the unicorn bank accounts with both no international withdrawal surcharges as well as ATM fee rebates, you’ll have to go looking in a country without universal health care the US, with accounts denominated in USD.

Alternative 2: Charles Schwab

The Charles Schwab High Yield Investor Checking Account is the gold standard recommended by all my American friends, and is the account that is most often referenced by miles/points sites. It comes with a linked Brokerage account, but there’s no requirement to actually use it. There are no fees for withdrawals, and you’ll also receive unlimited ATM rebates on from any ATM worldwide. There are also no monthly fees nor minimum balances required, and is probably the most economical option out there.

Schwab Bank No ATM Fees

Schwab Bank No ATM Fees

The only snag for Canadians are that a US Social Security Number and a US address is required for opening the account. Thankfully, I’m lucky enough to have one. But there’s no need to fret if you don’t.

Alternative 3: TD Premier Checking

This was a recent discovery, as I was looking through the US-affiliated subsidiary of the Canadian banks. TD Bank USA is based in Maine with a retail branch presence throughout the East Coast. Similar to TD in Canada, who holds the contract to issue Aeroplan’s co-branded Visas such as the TD Aeroplan Visa Infinite (see my review), TD Bank issues USD denominated Aeroplan credit cards.

TD Bank No ATM Fees

TD Bank No ATM Fees

Their Premier Account is their top of the line Checking option, which also rebates all non-TD ATM fees. However, the account requires a monthly $25 fee, waived with a balance of $2500 USD. USD savings accounts will pay 1% interest at most, so you’re foregoing roughly $25 annually by leaving your money with TD instead of in a Savings account.

If you’re like me though, you’ve probably made back the fee within one trip. I ended up making four withdrawals during a two week trip – in Dubai, Beijing, Doha, and Mexico City. I’ve yet to see a fee rebate for the Mexico City ATM that was the only one which levied a surcharge on their own, but we’ll see.

TD Premier Signup

TD Premier Signup

This might be the best option for most Canadians, as there’s a page specifically targeted for Canadian residents, accessible through this link. You’ll be able to put in your Canadian Social Insurance Number as well as a Canadian address. To fund the account the easiest way is through a TD Canada Trust wire transfer. If you don’t already have a USD account, TD will take 2-4% on the conversion from CAD.

What Account should I Choose?

The debit card issued by both US accounts is a Visa, so worldwide acceptance is pretty universal. Deciding which account to open merely depends on your personal situation.

Everyone should get a Tangerine account. It’s free to maintain, and you get $50 to start with Orange Key code 44369391S1, doubled from the regular offer. This runs only until December 31st, so jump on it nowAs long as you’re using the right banks, you’ll be able to withdraw currency for free.

Tangerine Orange Key

Tangerine Orange Key

The TD account is also a good option. However, you need 2500 USD to start, which may be an an issue if you need to convert Canadian Dollars, as the CAD -> USD exchange rate is quite poor at the moment. Also, if you’re far away from a TD USA retail branch, it’s a bit of a hassle as TD branches in Canada are unable to provide banking services such as changing PINs, depositing funds, or issuing new ATM cards.

If you do have an SSN, I would recommend opening a Schwab account as there are no minimums required. Do keep in mind that there’s a hard inquiry on your credit report when you first sign up. Other than that though, there are no monthly fees or minimums, and the sentiment and comments online about Schwab is very positive.

Right now, I have all three accounts, although I’ve been primarily using my TD account. I have yet to try firsthand a withdrawal with my Schwab or Tangerine card, so will definitely report back when that happens. Most likely, I’ll ATM withdraw USD from my Canadian Tangerine account at a Bank of America ATM, then move the USD funds over to my TD account for other international currencies. It’s complicated, but most likely the cheapest way for me to get my foreign currencies when I’m travelling!

Application Details

To apply, use these following links:

Do you have any other ways you withdraw your money with travelling?

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Comments

  1. TD Canada trust all inclusive account waives atm fees, and so does the BMO premium plan (but up to five in a month)

    Seems more relevant to Canadian readers than US alternatives. Keeping 5k cad in a local account is much more feasible (payroll, bill payments, safety deposit box) than 2.5k USD in a foreign account which would not be used often

      • The TD US visa charges 3 percent foreign transaction fee, and when I was setting up my premier checking account I expected that atm withdrawals at non USD machines would have the same 3 percent worse exchange rate.

  2. Jeff,

    You should talk about the trick to overpay a Chase Canada Visa and then use it at an ATM abroad. You only get charged the $5 cash advance fee with no interest and no spread over the interbank rate.

        • I’m also curious to hear if Tangerine charged the foreign transaction fee. I just called and spoke with a representative from Tangerine who assured me there was administration or foreign transaction fee charged. If the foreign ABM used does not belong to the Global ATM Alliance, Tangerine will charge $2 for withdrawals. Additional fees will be charged by the foreign bank to whom the ABM belongs (which is standard). By comparison, CIBC charges $5 for foreign ABM withdrawals plus an additional 2.5% administration fee

          • My apologies, there was a single word missing in my initial comment which changes everything. To clarify:

            I just called and spoke with a representative from Tangerine who assured me there was NO administration or foreign transaction fee charged.

            In other words, Tangerine remains advantageous even at ABMs that are not apart of the Global ATM alliance as you will only be charged the $2 fee and any charged by the foreign bank. The standard 2.5% admin fee (as charged by CIBC et al) will not apply even if the ABM is not apart of the Global ATM alliance.

            I have spoken to multiple Tangerine representatives who have confirmed this each time.

    • Just came back from Paris. Withdrew 100 euro from NBP Paribas ABM, which is part of alliance. I was hit with a foreign transaction fee + 2 euro transaction fee.

      Here are my findings, hopefully you will find it useful.
      All transactions happened on the same day 10/22/2015
      -Tangerine ABM – Exchange rate 1.52 + 2 euro (Worst)
      -CapitalOne Aspire MasterCard 1.5028
      -Accu-rate.ca 1.4937 (rate on that day)
      -Amazon Visa (no foreign transaction fee) 1.491 (Best).

      It makes sense to charge everything on Chase Visa card as you get the best rate plus 1% cash back.

  3. Another foreign exchange thing I recently discovered is that when booking a hotel, you can have the web site show the rate in CAD (using approx. the Xe.com conversion rate). However, AMEX will charge your card in USD and then convert it with the 2.5% surcharge. Visa will use the CAD amount as indicated in the hotel website (Agoda). Agoda advises of this but have not noticed other sites do it–when the flag came up advising what AMEX would do, I just changed to VISA and no problem. Anyway, saves the 2.5% conversion fee!!

  4. It’s not true that you “receive nothing” if you don’t open a Tangerine account through your link. Their regular offer is $50. $25 upon open and $25 for 6 months of putting $100 into the account. so you get $50 plus 2.4% interest on the account for 6 months if you want to deposit more.

  5. I was in Peru for 3 weeks and had no problem using my Scotiacard with Scotiabank, so no atm fees. HOWEVER tangerine, which claims to work on the scotia global network only worked in one scotia ATM out of 10 or 15 different locations I tried. Sooo I wouldn’t rely on tangerine as my only plan when traveling.

  6. Another option is to get a Zenbanx account. On one hand they have one of the best currency exchange rates out there. On the other hand you can use your debit card abroad (once you’ve exchanged CAD to your desired currency) in that country and withdraw money for only a $3 fee.

  7. Pushing US accounts is really not in the interest of readers. Unless you have a US income, you still have to exchange CAD to USD somehow. Zenbanx, BMO or TD’s plans are much more practical, or cash advances from the Amazon Visa for a 1% (minimum $5) fee.

    But then again, you can’t push referral links with those actually helpful options…

    • As I mentioned in previous comments, both TD and BMO both charge 2.5 in forex fees even with an premium bank account. Why would I pay $5 on a cash advance fee when I can withdraw for free from Tangerine? I’d hope that most intelligent readers had converted CAD to USD when the loonie was stronger a few years ago.

  8. Add another data point for Tangerine. I too was led to believe it was a better deal to use their card travelling and in Spain at Deutsche Bank I ended up getting dinged $21.36 on a withdraw of 400 euro. It shows up on line as a withdraw from Scotiabank with no breakdown. Stick with converting travellers cheques at the banks along the way. Bit more of a hassle but saves a few $$$.

  9. Personally I have Tangerine Bank and its amazing for GlobeTrotters i am not sure why others didnt have the same experience abroad..

    My Recent Trip to Japan i wanted to test my new card and I was charged the following:
    20-Aug-2016 Usage Charge by CIRRUS -2.00
    20-Aug-2016 Withdrawal – International JAPAN -65.70

    I took out 5000 Yen which was 77.88 per C$ shown at Xe…. So technically i should be charged $64.20 but got charged an extra 2.28% or C$1.50 which i assume was charged by the Japanese ATM. Tangerine saved me a lot…. its seem like the only bank in Canada that doesn’t charge a Foreign Currency Conversion Fee while the rest including PCF charges 2.5%.

    I wish we had something Similar to Charles Schwab here in Canada; and like the writer mention the best alternative is having TD Premier Checking but for this to be any convenient we need a source of $US Funds and willingness to put away US$2500 every month. So i believe other than Tangerine the best Alternative is having a no foreign transaction fee Credit Card which you have to pay up in advance; so time to apply for the Chase Amazon Visa Card.

  10. I was wondering if you knew anything about using PC Financial outside of Canada, specifically in the UK and Ireland. In the past I’ve been advised by PC to use Barclay’s ATMs in England and Scotiabank ATMs in South America to avoid some fees but is this a global ATM network thing rather than a special PC option?

  11. Since April 2017
    Tangerine has equal 2.5% charge a Foreign Currency Conversion as any other international credit card

  12. It seems that the Amazon Visa card is being discontinued. The application form has gone from the Amazon website. Too bad, because this was a good card to have (no annual fee, (No FX fees and 1% cash back on all purchases.) However the Chase Marriott Visa card website is still accepting applications.
    If you have a Rogers or Fido cellphone, an even better card might be the Rogers or Fido MatserCard issued by the Rogers Bank. They still charge 2.5% FX fee but then you get 4% rebate on all foreign purchases. The catch is that you have to spend those rebates with Rogers/Fido.

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