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.
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
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!).
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 44400167S1 (otherwise you receive nothing). You must put in the Orange Key referral code during the signup process. Otherwise, you won’t receive the bonus.
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.
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.
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.
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.
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.
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 44400167S1, doubled from the regular offer. This runs only until April 30th, so jump on it now. As long as you’re using the right banks, you’ll be able to withdraw currency for free.
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!
To apply, use these following links:
- Tangerine Checking (make sure you use Orange Key 44400167S1)
- Charles Schwab High Yield Investor Checking
- TD Bank USA Premier Checking
Do you have any other ways you withdraw your money with travelling?