ARE YOU STILL USING TRAVELER’S CHECKS? Like the typewriter, the VHS and the eight-track tape, this antiquated means of insuring your travel money has gone out of style.
Today credit and debit cards are the safest and most hassle-free way to pay for day-to-day purchases and take out cash while on the road. As a rule, you should use credit cards for big purchases and debit cards to withdraw cash.
Of course, not all plastic is created equal. Most cards charge a 1% to 3% currency conversion fee (or foreign transaction fee) on purchases abroad. Other companies impose hefty fees for foreign ATM transactions.
So with moneysaving in mind, we researched which credit and debit cards are most cost effective for travelers. While no card is perfect, what we uncovered provides the best value for travelers…
An Excellent Travel Credit Card
Of all the credit cards we investigated, the Capital One Venture One Rewards Visa is the winner. Why? The company charges no foreign transaction fee, so all purchases are at face value. But that’s not all. The card also offers attractive travel-reward benefits too.
For every dollar spent, travelers receive 1.25 “No Hassle Miles”—miles that never expire, and that you can use to buy airline tickets for yourself or anyone else, up to 10 months in advance. To redeem the miles, you can either purchase tickets, and then contact Capital One for reimbursement or call the company’s rewards center (open daily) to buy the airfare directly. And the kicker? You’re not charged an annual fee, it covers lost luggage, and you receive added fraud protection security if the card is stolen or lost.
Of course, like every credit card, if you carry a balance you’re hit with a high interest rate. Though here’s a 0% annual percentage rate (APR) until January 2012, after the APR hikes up to 11.9%, 15.9% or 19.9% depending on your creditworthiness. And on that note, you must have excellent credit to apply.
If you’re a big spender and are okay with shelling out $59 a year as an annual fee, the company also offers the Capital One Venture Visa, which has all the benefits of its sister card but with the perk that you receive two miles per dollar spent, rather than just 1.25.
But you can’t use your credit card everywhere. Sometimes cash is king. So how can you avoid nasty ATM fees? Open a Schwab Bank High Yield Investor Checking account. It’s just like any other checking account, FDIC-insured up to $250,000.
But the major benefit is that the company reimburses every ATM fee assessed—worldwide—when you use the Schwab Bank Visa Platinum Debit card (included with your account) to take out cash. On top of that, unlike most other banks, Schwab charges no currency conversion fee for foreign ATM transactions.
Though the variable annual percentage yield (APY) is currently low—only 0.25%—there are no monthly service charges and no minimum balance, so there’s no harm in opening an account and transferring money over only before you travel. Then with your debit card in hand, head to a foreign ATM and withdraw money without paying fees. At the month’s end, Schwab automatically detects the fees and reimburses any charges. (However, we found some customers had to call Schwab to get international ATM fees refunded, so check your statement when you arrive home.)
The catch? You must first open a separate Schwab One brokerage account and link it to the checking account. But if you’re committed to saving ATM fees, the whole application process takes around 15 minutes.
Not comfortable opening the brokerage account? A number of other banks also offer reimbursement of some, if not all, ATM fees, though Schwab has the lowest account balance requirement. For example, TD Bank reimburses other bank ATM fees if you maintain a $2,500 balance. Bank of Internet offers up to $8 in ATM fee reimbursement every month but has a $5,000 minimum daily balance requirement if you want to avoid monthly fees. And the BBVA Compass Built-to-Order checking account refunds ATM fees, but the process must be done manually by mailing the company your ATM receipts.
In general, banks notoriously hide fees and twist account terms after they’ve lured you in. So double-check that company policies haven’t changed before you apply for any of these credit or debit cards. And always contact banks prior to travel to ensure the company’s security software doesn’t block your overseas card use.
But at the time of writing, armed with a Capital One Venture One Rewards Visa and a Schwab Bank Visa Platinum Debit card, you’re well equipped to navigate the world and the tough terrain of global banking fees at the lowest cost available.
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