Global ATM networks are probably the most revolutionary travel invention since the jet engine. Yet it's often difficult to know the best way to take advantage of this system: Which network should you have? Which banks charge outrageous fees, and which actually refund ATM fees? There's an enormous amount of variance. Many financial institutions do everything they can to stop you finding out about fees, figuring that will stop you from making an educated decision. It goes without saying, however, that ATM withdrawals will give you the best possible exchange rate, and you should exchange cash or travelers' checks as little as possible.
Which cards to carry?
Thankfully, there's the FlyerGuide wiki article on credit, debit, and ATM cards' foreign exchange policies. It's a must-read if you're planning to spend any length of time outside the United States, and could save you hundreds of dollars in fees, not to mention many headaches.
I won't repeat the entire article here, but simply ask you to report your own experiences to the wiki, and help keep it up-to-date. And don't forget to call your bank before leaving the US, to make sure they won't lock out your card from international use!
The short answer is that using CapitalOne is the surest way to eliminate currency conversion fees, but there are other banks that can do just as well, if not better -- especially if you want to earn interest on your account.
A family member uses Schwab Bank, for instance. They also offer a 0% conversion fee, and will refund ATM surcharges. Better than CapitalOne, they promise to refund an unlimited amount of surcharges instead of a $10 per month cap.
So the best arrangement might be to have an ATM card from Schwab, and a credit card from CapitalOne; you can earn cash back rewards from them on credit purchases made internationally, just as you would at home.
Visa and/or MasterCard, which operate on the same network (you'll almost never see one without the other). End of story. Don't even think about American Express.
Where can I use my ATM card?
I've only seen one country that doesn't have ATMs hooked into the international Visa network, and that was North Korea. And I have yet to use an ATM that didn't speak English. Sometimes, however, it can take a little local knowledge to find out which bank's ATMs are most likely to work for you. For instance, in Japan, you need to use a Post Office bank, 7-Eleven Bank, or Citibank machine; other banks don't interface with the international Visa network, even if they sometimes have English-speaking machines. Thankfully, as you might imagine, post offices and 7-Elevens are everywhere in Japan.
Every ATM is rejecting my card. What do I do?
As I mention below, you should carry some US dollars with you, enough to last a few days. The dollar is by far the best currency for the global traveler to carry as a backup.
However, back to the ATM problem. This happened to me in Malaysia. Apparently Malaysia decided to cut off foreign ATM cards that didn't use the European-style Chip and PIN system; this of course included my American card from ETrade.
Many exchange counters, especially those operated by banks, will take Visa or Mastercard cards. Your ATM card almost certainly operates as a debit card, and you can even do signature-based transactions with it. Go to the exchange counter, and tell them to withdraw the amount of money you want on the card. They may warn you that this is a cash advance, and will cost you interest -- it's not, so don't worry. Some may tell you to try the ATM again, but insist that the transaction will go through. In one part of Malaysia, I even had to instruct the girl at the Maybank counter on how to swipe an ATM card in the reader, since I didn't have a chip in my card! But I guarantee you this method will work. I was in Malaysia for over a month with no problems, withdrawing money this way.
As a very last resort, you can use Western Union to send yourself money. But don't do this except as a very last resort; their fees are extortionate. Money transfer services like Western Union are essentially a tax on the world's poorest people, sadly, but that's a topic for another day. It's good to know that they're around when you need them.
But what about travelers' checks?
Don't bother. They're not widely accepted any more, and you generally won't get a rate that's any better than exchanging cash. You should absolutely carry some US dollars with you as a backup: the almighty greenback is still by far the world's most exchangeable currency. Spread it out among your person and your luggage, where it won't attract attention, and don't carry bills larger than $20. Don't bother buying any foreign currency before you leave the US, as you will have zero trouble finding either an ATM or an exchange booth at your destination. Heck, some countries, like Panama and Cambodia, use US dollars for most transactions anyway.
Where should I hold my money?
Probably not in one of the so-called travel wallets, but that's a topic that I'll take up in a future segment of this series. Until then, happy travels, and don't spend too much...