You plan on doing more traveling to international locations. Why abroad, you will need access to your bank accounts. While you could choose to rely on your domestic accounts, there’s a better solution: open an international bank account.
Here are some reasons why this strategy makes sense and how it will make traveling easier and more affordable.
Keep ATM Fees to a Minimum
If you think that domestic ATM fees are getting steep, the fees sometimes charged abroad will undoubtedly be a shock. Depending on where you happen to be, the fee for using your domestic debit card at an international ATM could be anywhere between 3% and 5%. That doesn’t include some other surcharges that may be added. If you plan on being abroad for a month and tend to rely on ATMs for cash, the charges could consume a good bit of money.
One way to help keep the fees to a minimum is to consider opening an international account with a bank that’s part of the ATM Global Alliance. The banking institutions that participate in this network typically waive debit card fees when the account holder is a customer of any other banks within the Alliance.
That means even if you travel to more than one nation, it’s possible to use machines operated by one of the other member banks and avoid the fees. Think of what that will save you throughout a single vacation abroad.
Make the Most of Foreign Exchange Rates
Another point in favor of opening an international checking account is taking advantage of the most competitive currency exchange rates. While your domestic bank may not offer this option, many offshore banks allow customers to make transactions in multiple currencies.
In other words, you’re not necessarily pegged to your US dollar; it might be possible to pay for something using a currency that makes it easier to stretch your buying power.
The key is to understand the current exchange rate between the local currency and one of the currencies you can use for your international account balance. Identify the one that provides you with the best rate and use that for the transaction. Ultimately, you pay a little less and have more money remaining to use for later purchases.
Avoid Currency Exchange Markups
Assume that you did use your domestic bank account and wanted to exchange some cash for the local currency. A third party would be involved in the transaction, which would likely result in what’s known as a currency exchange markup. You’re paying a percentage that’s above and beyond the current exchange rate to enjoy the service.
You may not know that having an offshore checking account with certain banks could mean you don’t have to pay the markup. Banks with a presence in several nations that you plan on visiting would mean avoiding this fee for the entire trip. As with limiting or avoiding ATM fees, this can save quite a bit of money.
Understand Foreign Transaction Fees
Here’s another fee that may be added whenever you use your domestic account for ATM withdrawals, wiring money, or paying for purchases. There’s likely to be what’s known as a foreign transaction fee. This charge may be a flat fee, or it may be a percentage of the amount of money involved in your transaction.
Opting to establish and use your international account is more likely to eliminate this type of fee. Many international banks are part of networks that would waive this fee, provided you do business through other member banks. This can work to your advantage when conducting business transactions or even managing personal expenses while on the trip.
Enjoy Affordable and Fast Funds Transfers
Speaking of funds transfers, what happens if you need to transfer funds from your domestic account while on your international trip? What would occur if you wanted to send money to a third party? If you do everything via your domestic account, there would likely be some lag in completing the transaction and possibly more than a fee for a funds transfer.
There are international banks that can complete funds transfers between accounts in a single day. Depending on where you are and the bank you’ve chosen, the funds could be in the recipient’s account in less than a couple of hours. Banks that have branches or divisions in several countries worldwide may be able to complete the transfers in minutes.
Ensure Your International Account is Secure
Along with reducing overall banking costs, there’s another aspect of your international bank account that you want to consider. It has to do with access and security. On the one hand, you want the ability to access your account around the clock, initiate transfers, and in general, make sure everything is okay. At the same time, you want some assurance that the account is secure.
One thing that you may not know about international banks is that the security measures taken are likely to be similar to those used by your domestic bank. In some cases, the security protocols may be more stringent. While that won’t necessarily mean you have more than one or two additional steps to access your account, it will mean that unauthorized parties will have a tougher time getting to your money.
Whether you primarily travel to one international destination or like to visit several different countries, offshore bank accounts can be ideal for you. Take the time to consider multiple options and look closely at the fees associated with each account type.
Make sure that you have easy and secure access no matter where you’re headed. Once you have the international checking account established and your debit card is in hand, enjoy your trip without worries about sending or receiving money.
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Luigi Wewege is the Senior Vice President, and Head of Private Banking of Belize based Caye International Bank, a FinTech School Instructor and the published author of The Digital Banking Revolution – now in its third edition.
You can follow his posts on trends shaping the banking and financial services industry on Twitter: @luigiwewege