Thirteen percent—that was the fee an ATM in Lamego, Portugal tried to charge me when I withdrew cash in USD. I declined this offer, as I always do, and realized that the key to saving money while traveling lies in choosing the right bank accounts and steering clear of hidden charges. Whether your adventures take you to Vietnam or Argentina, here's how to dodge those pesky ATM fees, foreign transaction fees, and dynamic currency conversion costs.

Common Travel Banking Charges

Here are three common fees that can quickly add up when using a debit or credit card abroad.

1. Foreign Transaction Fees

Many banks and credit card companies impose a fee for currency conversion, typically between one and three percent.

2. ATM Fees

Using an ATM outside your bank's network can lead to additional fees, both from your bank and the ATM itself. These charges can reach $15 or more per withdrawal, so choose your ATM wisely!

3. Dynamic Currency Conversion

Restaurants and shops often offer the choice to pay in local currency or your home currency. Always opt for local currency to avoid hefty fees, usually around 3-5%. Some ATMs even offer this option, with fees reaching 13%! Make sure to decline it if prompted.

Tips to Evade ATM & Foreign Transaction Fees While Traveling

One of the best ways to save while traveling is to have a bank account and credit cards that don't charge fees. Photo credit: Pexels.com

1. Seek Out No-Fee Bank Accounts

A friend from the U.S. living in Singapore recommended the Charles Schwab Investor Checking Account, which has no minimum balance, no ATM fees, and unlimited ATM fee reimbursements worldwide. It's FDIC insured, too! They refund any ATM fees charged by other banks monthly. (Remember, dynamic conversion fees aren't refunded.)

This account can save me around $80/month while traveling! They also provide 24/7 customer service based in the U.S. You'll need to open a free brokerage account to access this checking account, but you don't have to actively use it. Just ensure you fund the checking account to receive your debit card.

2. Use Partner Banks

If you want to stick with your existing bank, research their international partners. This could help lower or waive ATM and foreign transaction fees. However, options may be limited outside Europe and Australia/New Zealand.

3. Opt for Low-Fee ATMs

Most ATMs charge fees nowadays, especially in tourist areas. Avoid major bank ATMs like Citi or HSBC, as they often have high fees. Instead, try local banks; their fees are usually lower than those of international chains.

4. Consider Credit Unions

Local credit unions might help you reduce fees. While ATM fees can still apply, they tend to be lower (around $2) compared to larger banks (often starting at $4-5). Foreign transaction fees could also be lower, so confirm rates with them prior to your trip.

5. Choose No-Fee Credit Cards

Look for credit cards that don't charge foreign transaction fees, like the Capital One credit card. Many airline cards and major banks like Chase, Bank of America, and Citi have adopted this policy. Some rewards cards may have annual fees but also waive foreign transaction fees, so choose wisely.

6. Plan Ahead

Open any new bank accounts at least three months before your trip to avoid potential holds on funds.

7. Inquire About Fees

Many banks charge monthly maintenance fees unless you maintain a certain balance or receive direct deposits. If you're traveling without direct deposits, check with your bank beforehand. I switched to Charles Schwab after encountering issues with my previous banks.

8. Carry Multiple Cards

I always bring both Visa and Mastercard since they're widely accepted. American Express can be handy for specific airline websites but isn't universally accepted. Be cautious, as it may not be available everywhere.

9. Monitor Exchange Rates

If your home currency is declining, withdraw cash before it drops further. Conversely, if it's rising, take out cash while the rates are favorable. The XE app is great for checking rates.

10. Avoid Airport Currency Exchanges

Airport exchange rates are typically poor. If you must exchange money at the airport, only do so for a small amount; visit a local bank for better rates afterward.

11. Carry U.S. Dollars

Many places accept U.S. dollars. Always compare prices in both local currency and USD. For example, I saved $9 on an Easter Island park entry fee by paying in USD, but saved $54 by paying for my hotel in local currency.

12. Use Bank ATMs Only

Avoid ATMs in hotels or isolated areas, as they often carry higher fees and worse exchange rates. Stick to ATMs located in reputable banks.

13. Reject Dynamic Currency Conversion

Many shops and restaurants offer the option to pay in your home currency, but this can add 5% or more to your cost! Always choose local currency. For example, I had to pay for my rental car in Euro while in Iceland, which ended up saving me about $25.

14. Avoid Pre-Purchasing Foreign Currency

While it may seem convenient to get foreign currency from your bank before your trip, you'll likely pay a higher rate than if you withdraw cash upon arrival. It's usually best to use an ATM once you land with your fee-free account.