Simple tips to avoid expensive fees and get better exchange rates abroad
Picture this: you’ve just landed in a foreign country, you’re excited about your holiday, but then reality hits – you need cash. Standing in front of an ATM at the airport, you’re faced with a dilemma that many travellers know all too well. Do you withdraw money and risk unknown fees, or do you hunt around for alternatives while your taxi meter runs?
It’s a decision that can make or break your travel budget, and with hidden charges lurking around every corner, even the most seasoned travellers can fall into expensive traps.
Fred Harrington, the CEO of Proxy Coupons, a discount platform specialising in online deals, brings years of experience in helping consumers navigate financial decisions and avoid costly mistakes.
“The ATM debate is one of the most common travel dilemmas I hear about,” says Fred. “People want convenience, but they also want to protect their hard-earned money. The truth is, there’s no one-size-fits-all answer – it depends on your destination, your bank, and how savvy you are about avoiding the traps.”
With international travel costs already putting pressure on budgets, you could save significant money on your next trip simply by understanding when and how to use ATMs abroad.
The Pros And Cons Of Using ATMs Abroad
Fred shares the advantages and disadvantages of using ATMS in foreign countries.
The Pros:
- Convenience At Your Fingertips: ATMs are everywhere, from busy city centres to remote beach towns. You don’t need to plan ahead or carry large amounts of cash through security checkpoints.
“For a lot of travellers, the convenience factor outweighs everything else,” explains Fred. “You can get local currency within minutes of landing, and you’re not tied to a bank’s opening hours.”
- Better Exchange Rates Than Currency Exchanges: Airport currency exchange booths are notorious for poor rates, often substantially worse than what you’d get from an ATM. Most ATMs use the interbank exchange rate, which is typically much fairer than what you’ll find at tourist-focused exchange services.
- You Only Take What You Need: Unlike exchanging money before you travel, ATMs let you withdraw cash as needed. This means you’re not stuck with leftover foreign currency at the end of your trip, and you can adjust your spending as you go.
The Cons:
- Hidden Fees Can Add Up Fast: Your own bank might charge foreign transaction fees, ATM usage fees, and currency conversion charges. The foreign bank operating the ATM often adds its own fee on top.
“You can end up paying £8-10 in fees just to withdraw £100,” warns Fred.
- Exchange Rate Manipulation: Some ATMs offer “dynamic currency conversion” – they’ll show you the amount in your home currency and ask if you want to accept it. This might seem helpful, but it usually comes with a terrible exchange rate. Always decline and pay in the local currency.
- Security Risks: ATMs in tourist areas can be targets for card skimming devices. Plus, carrying cash makes you a potential target for pickpockets, especially when you’re clearly a tourist fumbling with unfamiliar notes.
Hidden Fees To Watch For
Fred warns about the fees that could be lurking behind every ATM withdrawal.
Foreign Transaction Fees
Most banks charge a small percentage on every international transaction. This applies even when you’re just withdrawing cash, not making purchases.
ATM Operator Fees
The bank that owns the ATM often charges a fixed fee. This can hurt if you’re only taking out small amounts. And when you’re making multiple withdrawals throughout your trip, withdrawal fees add up.
Currency Conversion Charges
Some banks add an extra percentage on top of the standard exchange rate. This “margin” means you’re paying significantly more than the real exchange rate.
Daily Withdrawal Limits
Your bank might have lower daily limits for international withdrawals, forcing you to make multiple transactions (and pay multiple fees) to get the cash you need.
Smart Tips To Reduce ATM Fees
Fred advises on how to lower the risk of being charged.
- Use Your Bank’s Partner ATMs
Banks often have partnerships with international ATM networks.
“Before you travel, check if your bank has partnerships in your destination country,” suggests Fred. “You might be able to use certain ATMs fee-free.”
- Make Fewer, Larger Withdrawals
Instead of taking out small amounts frequently, withdraw larger sums less often. The fixed fees hurt less when you’re spreading them across more money.
- Choose The Right Travel Account
Some banks offer accounts specifically designed for travellers, with reduced or waived international fees. These might be worth switching to if you travel regularly.
Better Alternatives To Consider
Fred offers a list of alternatives to ATM withdrawals.
Prepaid Travel Cards
These cards let you load money before you travel and often offer better exchange rates than ATMs. You can usually top them up online while you’re away.
Digital Payment Apps
In many countries, mobile payment apps are widely accepted. If you can pay by phone, you could avoid cash altogether.
Regional Differences Matter
Europe generally has good ATM coverage and reasonable fees, especially within the EU. Asian countries vary widely – Japan has long been very cash-focused, while South Korea has fully embraced digital payments. US ATMs often have higher fees for international cards.
“The key is doing your homework before you go,” Fred advises. “Five minutes of research can save you dozens in fees.”
Fred Harrington, CEO of Proxy Coupons, commented:
“The reason some ATMs give better rates than others often comes down to which network they’re connected to and how they handle currency conversion. Major international networks like Visa and Mastercard typically offer competitive rates, but individual banks can add their own markup.
“There are several red flags to watch for. First, avoid standalone ATMs in shops or tourist areas – they often have the worst rates. Second, be wary of ATMs offering to convert currency for you on the spot – this ‘dynamic currency conversion’ is almost always a rip-off. Third, always choose to pay in local currency only.
“My biggest advice is to budget for ATM fees in advance. If you need $300 cash for a week-long trip, factor in an extra $20-30 for fees. Sometimes paying slightly higher fees for convenience and security is worth it – the key is making that choice consciously, not by accident.”
Photo by RDNE Stock project: