Last updated July 2020. ATM withdrawal fees, unfavorable foreign exchange rates, account management fees, network fees, transaction fees, card fees… Death by a thousand cuts. It all easily adds up to hundreds and even thousands of dollars over a year in the life of a digital nomad, long-term traveler or expat. Fight back and eliminate those extortionate banking fees!

The Real Cost Of
Banking Fees

We’re still shocked to see how the majority of travelers decides to ignore banking fees. It usually starts with monthly account and transaction fees. On top of that you get slapped with fat withdrawal and foreign currency fees. By both your bank and the ATM owner. And even if your bank waves those, the foreign exchange rates are poor, typically making you lose another 1.5-4%. The worst part is that the pricing structure is rarely transparent.

If you just spend a week abroad every year, it doesn’t really matter. But fees of 3-10%+ on everything you spend month after month is a huge burden. That’s hundreds or even thousands every year you can spend on something else. Or even better, save and invest.

For this article, we’ll only consider financial providers that have a free basic account. Many banks offer advantageous conditions to travelers ready to pay a monthly fee for a premium account, or meet certain criteria such as minimum monthly deposits. But that wouldn’t be a real budget approach in our book.

Eliminating Banking Fees
With Neobanks:

Neobanks are new internet-only financial providers shaking up the established banks. Their aggressive low-fee products and simple app-based business models are ideal for travelers, backpackers and nomads. Managing your money on the go just became a lot easier, while reducing or even eliminating those ludicrous banking fees.

There is however one important shortcoming to be aware of. Car rentals tend to insist on payment by credit card. But this is gradually changing. Sometimes it’s possible to use a credit card as guarantee, and a neobank debit card for the actual payment. And more and more agencies are outright accepting debit cards. But keep that credit card backup for now!

revolut app card
Revolut app and card

Revolut. Our favorite so far outside the US (and runner-up in the US). Read our long-term review here. The British neobank offers a no-fee basic online multi-currency account to residents from the EEA, Australia, Switzerland, and very recently Singapore and the US. It has ambitious plans to expand to Canada and many other countries very soon. 

Foreign transactions, transfers and withdrawals are totally free and use the interbank rates during weekdays. ATM withdrawals with the Mastercard (or sometimes Visa) debit card are free up to 200USD per month with the basic account. You can also create up to 5 virtual cards with custom limits. Great tools for less trustworthy online vendors abroad. 

There are a few downsides. On weekends rates are slapped with a 1% mark-up and may be less advantageous than other providers. Also, the Thai Baht and Ukrainian Hryvnia always attract a 1% surcharge, which goes up to 2% over weekends. And after the first 1250$ a month in foreign exchange, Revolut charges a 0.5% mark-up. In that case it’s often a good idea to switch to the TransferWise debit card.

Eliminate Banking fees
With Neobanks:
Other Contenders

N26. The German neobank has a free EUR basic account for residents of the EEA and the US. A delivery address in Europe counts as residency for N26, and you can conveniently open an account over the app, making it a great solution for travelers across Europe. 

N26’s basic account has no monthly fees, and no foreign transaction fees with the Mastercard debit card. The Mastercard official exchange rates are used, which are very close to the interbank ones. ATM withdrawals in Euros are free (but can be limited depending on the declared country of residency). Foreign currency withdrawals cost 1.7%.

Monese. A British neobank that offers a EUR and GBP account for EEA customers. Foreign currency transactions at the interbank rate are free up to 2000EUR/GBP a month. However foreign currency transfers attract a 2% fee. Free ATM withdrawals up to 200EUR/GBP a month.

Monzo. Yet another British neobank for UK, and soon US customers. No monthly fees, no foreign currency mark-up or fees, and free ATM withdrawals up to 200GBP a month.

Stack. Canadian financial provider with no monthly fees, no foreign currency fees when using the Mastercard prepaid card, and uses the Mastercard exchange rates without a mark-up. No ATM fees either.

Neon. Residents of Switzerland can get a free bank account and use it for foreign transactions at the Mastercard exchange rates, with no extra fees. ATM withdrawals and foreign currency transfers still attract a 1.5% surcharge.

Traveler-Friendly Traditional Banks

Some of the old players in the financial industry are starting to adapt to the fintech competition and offer more competitive accounts for travelers. But they often come with strings attached. Minimum balance, minimum monthly transactions, recurring deposits, poor exchange rates… Or a short-lived introductory offer. They might fit your particular needs and are worth investigating depending on your circumstances. But they rarely stand out, with one exception.

Charles Schwab Bank. For US customers only. The High Yield Investor Checking Account comes with no monthly fees, no minimum balance, no foreign transaction fees, no currency mark-up beyond the official Visa rates and no ATM fees. Even better, they reimburse fees that local ATM owners might add to the transaction. The included no commissions no fees broker account makes this a good all-in-one solution to integrate it with your DIY investments.

When Cash Is King:
Reducing ATM Banking Fees

Some countries like Sweden and South Korea have almost abolished cash with more than 90% of all transactions using plastic money. No problem with your no fee card. Other nations like Germany stubbornly stick to paper currency. For now. This gets even more pronounced in countries like Egypt where the local currency and banks have a long history of devaluations, bankruptcies and crises.

Assuming you already have found a financial provider that doesn’t charge you (much) for foreign transactions and currencies, you might still be left with local ATM fees. Avoid third-party ATMs in bars, hotels and convenience stores, which tend to attract higher fees. Do your research. See if there are any local branches of your bank. Which ATM providers don’t charge any fees. Or if your bank is part of the ATM alliance

If that’s not an option, see if it’s worth opening a local bank account to make low-fee transfers. Or if a friend can assist you through his personal local account. As a last resort, make sure you know what the withdrawal limit is and max it out. We regularly see people withdrawing small amounts. A 5$ fee on 20$ is ridiculous. On 200$ it’s already nowhere near as bad. And always withdraw in the local currency, never in another one when offered, the rates are systematically worse.

When Cash Is King:
Carrying US Dollars And Euros

As a traveler there is regularly no way around carrying larger sums on you. For example, you will struggle to find a working ATM in Tajikistan outside the capital Dushanbe. And it might be out of cash. Or swallow your card. Even worse when you go to Iran or Sudan, which are totally cut off the international payment system. And even with the best travel health insurance hospitals might still require an upfront cash payment before even considering treatment.

Worldwide the US dollar is still by far the most accepted currency. Many embassies require a cash payment in USD for a visa. And you will be able to exchange a dollar note almost anywhere in the world at a decent rate.  Basically, it’s always a good idea to carry a USD cash backup, including some smaller denominations. Just make sure the bills are looking new, some countries are very picky. If you come across a source of US dollars in cash with little to no fees, it’s a good idea to stock up.

foreign currency cash
Ever felt like a walking foreign exchange bureau?

The Euro comes in second place, and outside the Euro zone it’s particularly useful in Eastern Europe all the way to Turkey. The rates tend overall to be slightly worse than the USD, but still acceptable. At least in the bigger touristic cities. 

Carrying larger sums leaves you more exposed to theft, but the risk is very manageable. It’s good practice to always carry a money belt, and only take with you what’s strictly necessary. This is another advantage of budget traveling. It reduces the amount of cash you have to carry.

When Cash Is King:
Finding The Best Exchange Rates

The best rates for exchanging cash are systematically found in the bigger cities, especially in capitals with a large cash-based economy and significant trade like Istanbul or Bangkok. Don’t buy exotic currencies in your home country or in airports, the rates are always terrible.

Less popular international currencies, mainly the Euro, British Pound, Canadian dollar, Australian Dollar, Japanese Yen, New Zealand dollar, Swiss franc and increasingly the Chinese Yuan are best exchanged in these cities. There is often a cluster of money changers creating a highly competitive market. Shop around for the best rates, and beware of commissions. As a guideline, you can often get a mark-up smaller than 1-2% with a bit of patience.

Especially in developing countries land borders might also have a competitive exchange market for local currencies plus the US dollar and sometimes the Euro. Be prepared to bargain.

bank foreign exchange kyrgyzstan
Restocking on local currency in Kyrgyzstan

If you find particularly attractive rates, you can use the opportunity to restock on USD or EUR while on the road. This can regularly be done for less than 1% in total for what is effectively a double transaction. It might also be a good time to get some currency for the next country you plan on visiting. While not strictly necessary, it can avoid you hassle and poor rates at the border or airport.

Finally, some countries like Iran, Sudan, Venezuela, Argentina and Uzbekistan, have a more or less tolerated “parallel” black market. With poor official rates this is the way to go as a visitor. Just invest a few minutes in learning what real banknotes of the local currency should look and feel like. And enlist the help of a local as much as possible.

Transfer Money Abroad
(And Back) With Fintechs

If you have trustworthy friends or family abroad that are ready to help you, there is a straight-forward way to get cash in local currency with little to no fees. That also works if you are staying for several months in a country and are allowed to open a local bank account. For example under a working holiday visa scheme. And with the rise of fintechs, you can skip Western Union and its extortionate fees.

TransferWise. Specialized on low cost transparent international money transfers. No monthly fees. You get the interbank rate plus a small fee, typically much lower than regular banks. In other words you can wire money in over 40 currencies for less than 0.3-1% fees. However more exotic currency pairs can attract costs of up to 2.5%.

The multi-currency account is available to residents of around 170 countries. In some cases you can also get a free debit Mastercard which allows you to spend and withdraw in foreign currencies using the same conditions as a transfer. ATM withdrawals are free up to 250 USD per month, after which they incur a 2% charge. That makes it a great alternative if you are not eligible for Revolut. Or a good second card.

transferwise app card
Transferwise app and card

CurrencyFair. The Irish peer-to-peer currency exchange platform works on a similar low cost model. No monthly fees. The first five transfers are free. After you pay a small transaction fee and a typical currency markup of 0.4%. CurrencyFair currently offers 19 currencies. This makes it a good alternative to TransferWise. 

Revolut. The neobank currently allows you to send money in 29 currencies at the interbank rate at no extra fee whatsoever. 

SEPA. The Eurozone payment system deserves a mention if you are roaming around the Old Continent. It allows you to send Euros for free within the network. This will be of little use if you already have a N26 account. But it can still be useful to send money between EUR-dominated account.

These fintechs are also an excellent solution if you are earning money in foreign currency. If you are a digital nomad, backpacker or otherwise location-independent and make an income in several countries you can save a lot. Particularly if you had to convert your pay twice in the past. Multi-currency accounts also greatly simplify the currency juggling game.

You know of another strategy to eliminate banking fees missing? Let me know and I’ll add it!


Long-term travelers, backpackers and nomads!

If you are a US resident, go for a Charles Schwab High Yield Investor Checking Account.

If you are an EEA, Swiss, Australian or Singaporian resident, get a Revolut account and card for weekdays. And TransferWise for weekends. Pay as much as possible directly with the Revolut card, and withdraw within the free limit when in need of cash.

If you are from Australia and New Zealand, get a TransferWise card and account.

And for everyone, know where to get the best rates when a good ol’ stash of cash is useful or even necessary.