Moving to Europe III – Money, Banking & Credit Cards
One of the key aspects for anyone from the US who is going to spend significant time abroad is how to handle your money. How do you get your US$ overseas in a way that doesn’t cost an arm and a leg? What’s the best way to bank and use credit cards while you travel? Do you need to open a local account, or can you do everything you need to do while keeping your accounts in the US?
Now we don’t claim to be experts on all this, but in the time we’ve been together we have lived away from the US several times before, both in Europe and Asia so we have *some* experience. Plus the world has improved (banking wise) over the years. These days online banking is offered everywhere, and there are lots of ways to save money on both transfers and cash usage when you travel.
So in case you’re considering a stint abroad, whether it be short-term (or longer term), hopefully this post will give you some ideas for how to do it in the best $$ way.
Fees Involved In Using US$ Abroad
The first thing to be aware of when you travel are fees! There are several types of fees you could be hit with when you use US$ abroad, and it’s important to understand them. The first of these is something you’ll just have to live with, but the other 3 can be mitigated (or even entirely eliminated) if you’re smart.
1/ Exchange Rates
No matter where you go, if you want to exchange your US$ into local money there will be an exchange rate involved, and it’s never a fixed thing.
First of all, currencies are traded worldwide so the exchange rate changes everyday. For example right now (as I write this post) the official exchange rate (= mid-market rate) between US$ and Euros is around 0.81 ($1 USD exchanges to €0.81 EUR), but that rate will be different later today, tomorrow, or next month. It’s always changing.
Also this exchange rate is never the same as the rate you’ll get through a local bank or agency. Local agencies always have their own exchange rates which are “padded” a bit to give them some profit. So, for example if I choose to exchange $1000 USD at Travelex today, they’d only give me €728.50 EUR (= their published rate) not €810 EUR (= the mid-market rate). The difference is the profit that they keep for themselves.
2/ Foreign Transaction Fees
In addition to currency exchange rates, you also have to be aware of something called foreign transaction fees. This can apply to both credit and debit cards and, if your card has it, that means you get charged an extra fee every time you use it abroad. It typically runs 2-3% of the cost of your purchase. So, if you charge $1000 on your credit card in a foreign country, you could be hit with an additional $20-30 of foreign transaction fees after-the-fact. It really adds up!
3/ Cash Withdrawal Fees (at ATMs)
If have a globally-accepted debit card*, you can withdraw local currency cash at most international ATMs the same way you can at home.
As long as the ATM you want to use displays a symbol that matches one on your debit card (e.g. Visa, Plus, Cirrus, Star etc.), then it’s a simple matter of inserting your card, plugging in your pin and you’re good to go. However, there will typically be additional fees involved that are charged by either your US bank, the local bank or both. This fee can vary from a fixed fee (per withdrawal) to a percentage (of the withdrawal) and they can be steep! For example Chase charges $5 PLUS 3% on all international ATM withdrawals…yikes! Also some debit cards will charge a foreign transaction fee (#2) in addition to the cash withdrawal fee, so be aware of that too.
*NOTE1/ Cash Withdrawal With Credit Cards? I specifically mentioned debit cards here, not credit cards. You can certainly use a credit card to withdraw cash from ATMs, but I would never, ever recommend it. This is considered a “cash advance” and typically has horrendous fees ($10 or 5%, whichever is higher!!) Just don’t do it.
4/ Cash Transfer Fees
If you decide to transfer money between countries wither via wire transfer or some other method there are typically also transfer fees involved that can vary from nothing (in select cases) to hundreds of dollars transaction.
So now that you know which fees you might run up against, how do you minimize or avoid them?
Transferring Cash From US To Another Country
If you’re going abroad for a short vacay, or (the other end of the scale) you’re planning a longer-term stay in a particular country, then you might want a way to physically transfer cash from USA to overseas. There are several ways to do it, depending on how much you need, and how often you plan to make a transfer.
1/ Carry Cash With You
If you’re only traveling for a short stint (say a holiday or a few weeks) you can bring US$ with you in hand and simply exchange them for local currency (at an exchange service or bank) when you get to your final destination. This is certainly the easiest method and one I’ve used many times before. I always carry some cash on-hand, no matter where I go, and try to find the best exchange rate (see above) before I change it to local currency. For added security, I always keep my money and key documents in a good money belt. For the latter I recommend a belt that sits close to your body, has integrated FRID protection, and won’t buzz thro’ security. This Thin Profile Belt from Amazon.com is an excellent example.
For longer-term travel stays however, this is just not practical. In EU, you have to declare anything over €10,000 and, for security purposes, you wouldn’t really want to carry that much cash anyway. So, what are the other options?
2/ Open A Local Bank Account & Wire Money
This is probably the most “old fashioned” way, but it’s tried and true and it’s the method we’ve used in our previous stints abroad. Once you arrive to your “new” country you simply open a local bank account, then you wire money from your US bank account to fund your local bank account as needed. You’ll need to collect some info (e.g. international account number & routing codes), and you may be limited on how much you can send (depending on the bank), but most banks offer this service online, so it’s usually fairly easy to do.
Gotchas? It might take some time before you can open a local bank account in your “new” country (sometimes you’ll be required to have a local address, local credit etc. before you can open an account). Also wire transfers cost $$! Your US bank will likely charge an outgoing international wire transfer fee ranging anywhere from $10 to $75, and your incoming bank likely has an incoming fee too. Plus currency exchange rates can be poor, depending on the bank and how you choose to wire the money (i.e. in local currency or destination currency).
3/ Open An HSBC Account That Allows Fee-Free International Transfers
One of the most innovative ways to cut down on wire transfer fees is to open an account with a global bank like HSBC. They’re one the very few banks I know where you can open accounts in multiple countries (sometimes even before arrival), see every account online (through a SINGLE log-in), and conduct fee-free wire transfers (up to $200,000 at a time!) between them with ease. In addition, you can withdraw cash at any international HSBC ATM free of charge.
Gotchas? You have to open an HSBC Premier or HSBC Advance account (both require maintaining certain minimums) to take advantage of international services, plus HSBC doesn’t always offer the (absolute) best currency exchange rates. Still, it’s one of the easiest ways I know to bank across multiple countries.
4/ Use A Peer-To-Peer Transfer Service
One the biggest changes I’ve seen in the money space since the last time Paul and I lived abroad is the explosion of online peer-to-peer money transfer services.
Back in our day, Western Union was really one of the few guys in the biz, but nowadays there are big players like World First, TransferWise, HiFX and more**, and they are really VERY snazzy to use. All are completely online and can be set-up in minutes, they’re inexpensive to use and they’re super fast too! Costs vary depending on $$ sent, so be sure to shop around for best price (this site has a useful comparison tool), but the rates are usually waaaaay less than bank wire transfers, and they usually guarantee faster transfer times AND better currency exchange rates than any bank too. For example, World First charges a flat fee of $10 on transfers up to $10,000 and no fee on transfers over that amount, a total deal! TransferWise charges a tad more, but guarantees real exchange rate (mid-market rate) on all transfers.
Gotchas? You’ll have to move your money from your “regular” account into the peer-to-peer service account before you initiate a transfer. Plus you’ll need somewhere (an account) to send the money to in your destination country. Each of these steps may involve additional fees (e.g. sending fees, receiving fees) so just make sure you include those in your final costs.
**NOTE2/ What About Paypal? Paypal is another well-known peer-to-peer transfer company, but I didn’t list them as an option simply because thy’re so darn expensive. International Paypal transfers are a small fixed fee PLUS 0.5-2% of the amount (depending on country) PLUS a currency conversion fee of 2.5%! This is OK for very small transfers (say, below $100), but it’s a terrible deal for anything larger.
Using Money (Abroad) That You Keep In The USA
Another option to physically transferring money abroad is simply to keep your money in your US accounts, and then use it through credit cards & ATM withdrawals abroad. This is actually one of the easiest ways to travel, especially if you plan to travel full-time and/or don’t plan to have a fixed base in the places you’re going (e.g. you’re RVing!). As long as you are aware of the fees involved and take a few steps to minimize them, it’s super easy to do too.
1/ Use Credit Cards With No Foreign Transaction Fees
One of the BEST steps you can take for international travel is to open one (or more) US-based credit cards with no foreign transaction fees. This allows you to charge all your travel expenses to your card in local currency without worrying about getting hit with extra transaction fees after-the-fact. Then you just pay off your card in the US, through your US bank account in US$. Easy peasy. There are many cards that have this benefit and you can read about a few of them HERE (The Points Guy)
Gochas? Although you avoid foreign transaction fees (with the right credit cards), you can’t avoid currency exchange rates. The rates on credit card transactions are set by the processing agency (see Visa and MasterCard online currency conversion tools), and integrated into the final price you see on your statement. They tend to match market fairly closely, but DO vary some from card to card (Pro Tip -> Mastercard tends to offer the best rates). See this post and this post for more about these rates.
2/ Use A US-Based Bank That Refunds International ATM Fees
What if you prefer to use cash? As I mentioned above, as long as you have a globally-accepted debit card* you can withdraw cash internationally from ATM’s the same way you do in the USA, but (yet again) you must beware of the fees! Many US banks charge fees for withdrawals from banks that are not in their network. In addition the local bank (in the foreign country) may also charge a fee, plus you might get charged a 2-3% foreign transaction fee too. But you can avoid all this! There are several different options out there, but IMO one of the best & easiest is to open a high yield checking account with Charles Schwab. It doesn’t cost anything to open, requires no minimums (it just needs to be linked to a Brokerage Account, which is also free to open), and you’ll get a Visa Platinum debit card that offers unlimited ATM refunds (anywhere in the world), with no foreign transaction fees. Outstanding! This is such a no-brainier that I really feel every traveler should consider it.
Gotchas? You’ll need to get your money from your “regular” US bank account into Schwab before you can withdraw anything with your debit card. So that does mean setting up a transfer between accounts, and then waiting for the funds to clear (takes 4 business days at Schwab). It’s FREE to do this however, so you just need to plan ahead to make sure your Schwab account has $$ in it when you need it.
Chip & Pin Credit Cards
A little extra caveat to consider when traveling to places like Europe is getting a credit card that offers “true chip and pin” capability, and this does take a little extra planning.
Most credit cards in the US these days are something called chip & sign. This means that instead of swiping your card to charge it (= the old-fashioned way) you insert it into a chip reader (almost all US credit cards have this option now), and then you sign the receipt manually after it is printed.
Europe is somewhat more advanced in this space. Over there most credit cards are chip & pin, which means that after you insert you card into the chip reader (there’s even wireless options these days) then you’re prompted for a pin number and that’s it. No signature needed, no extra stuff.
Why does this matter?
In most cases it actually doesn’t. In my experience 90-95% of places in Europe will accept regular American-issued chip & sign cards including pretty much all restaurants, hotels, airports etc. Instead of asking you to use the pin-pad to enter your pin number, they’ll just print out a receipt for you to sign on the spot. But there are 5-10% of places which do not and this includes certain grocery stores, automated kiosks at train stations, un-manned gas stations, un-manned bridge tolls etc. And if you’re planning to RV in Europe, these latter can be rather important. So, if that’s your plan it may be worth getting a card that can handle this before you go.
Not many US banks offer credit cards with true chip & pin capability (in addition to no foreign transaction fees), but there are a few banks that do and Barclaycard is IMO the biggest. The card that we carry is Barclaycard Aviator.
So, What Options Are We Using?
For now we’re keeping our money in the US until we decide where/when/if we want to bank in Europe, and we’ll simply travel on our credit cards and cash.
Credit Cards: We already have several no-foreign transaction fee credit cards in our wallet. Our top two favorites are Chase Sapphire Reserve (personal card -> our referral link HERE (50K sign-up bonus) if you’re interested) and Chase Ink Preferred (business card -> our referral link HERE (80K sign-up bonus) if you’re interested). Both of these earn UR points which are super valuable (we regularly redeem them for free plane tickets), plus they provide excellent travel benefits like primary car rental insurance, trip protection, Global Entry, lounge access and more. In addition, we both carry a Barclaycard Aviator card (true chip & pin capability, no foreign transaction fees, earns AA points).
Cash: For cash we thought seriously about using HSBC to open an account here and in France (it’s a very elegant solution), but we aren’t sure where our European RV travels will take us or how much time we’ll spend in France over the long term. So, in the end we went with a high yield account at Schwab. We can transfer money for free from our regular accounts to Schwab anytime we want and it gives us an easy, low-cost (all fees refunded) way to withdraw cash while abroad. If we decide to bank locally in Europe we’ll figure that out later.
That wraps up my post on money matters. If you have any additional questions or tips, feel free to comment below!SPONSORED LINK:
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We LOooVE Comments, So Please Do
JC Webber III says
We recently purchased a townhouse in San Miguel de Allende, Mexico. We opened a bank account at CiBanco in town. Now we transfer funds via TransferWise for about 1% ($49.95 to move $5k). For walk-around money when in country we use our no-fee CiBanco ATM card. So far it’s working like a charm. Also, CiBanco allows us to write them a check against our WF bank in the states (usually for around $5k per transaction) and they give us the best exchange rates. TransferWise also gives us the best exchange rates available at the time of the transaction.
Works for us…
This matches the good reviews I’ve read (and heard about) on TransferWise from others. When we need to wire money in EU, they’re going to be one of our top choices.
Marcia GB in MA says
Very informative post. Thank you.
Kevin in CO says
Very interesting, thanks. We will be in Europe for 2 weeks this spring, and I was already thinking about this problem. We are already Schwab customers, but I think we need to upgrade our credit card.
Andy Patterson says
If your US banks have started to issue tap/contactless Visa cards, you may want to consider one of these.
Don’t know about the continent, but most vendors in UK are now set up for this service. In Canada our limit is normally $100, but UK is currently only UKP 30. Simply tap your card and no signature or PIN # required.
I saw these cards during my last visit to France and they are awesome. They are the essentially the next-step wireless upgrade of chip and pin. My dad has one and it felt rather magical to just “tap it’ and pay. So darn cool!
Sadly no US issuer offers them yet. The US banks always lag behind on these things.
Fantastic article! Thanks for sharing all your personal experiences with us. Slightly off-topic but I wonder if anyone could chime in regarding how to set up any UK bank act when you live in USA and don’t stay in uk? Now 65 I need to get pensions paid to me from UK but, because of all the FEES as you mention, I prefer they feed into a uk bank from where I can move money in chunks later, online. But I hear it is hard without, as you say, a UK address. We will travel to uk in September to try to set things up..
I actually looked into this, and the ONLY possible way it might be possible is through HSBC. Every UK bank I know requires you to have a local address, so that’s a gotcha if you’re not yet (physically) there. HSBC claims to be able to setup bank accounts abroad, as long as you have a bank account with them here in the US that meets the global banking requirements. So, although I’m not 100% sure they can do it in the UK (I didn’t actually go through the process myself), that’s who I’d recommend contacting to try.
Here’s a link: https://www.us.hsbc.com/international-banking/
Thanx Nina, I did look at HSBC but think you need to be super-rich, like maintain $50000 in acct at all times else incur huge fees… maybe i’m wrong…
My understanding is that they have 2 accounts that allow global banking -> HSBC Advance & HSBC Premier (see this link -> https://www.us.hsbc.com/international-banking/#global). The Premier account has hefty minimums, but the Advance (only) requires $10,000 OR $5,000 with a recurring direct deposit once/month (e.g. SSN check or other). Like I said I don’t know exactly which option allows you to set-up bank accounts overseas, OR if it’s even possible in UK specifically. But that’s where I’d start looking.
By the way if you do manage to set-up a UK account with HSBC (or you find out it isn’t possible for some reason) please DO report back on the results!! I’d be really interested to know, and I’m sure others would want to know too.
1) Sorry this is no help, just an ‘explanation’ of why things are so difficult now: mainly the fault of the US/IRS, (research ‘FATCA’) who decided to go after Americans’ money overseas, throwing their weight around threatening legal action against overseas banks, who understandably got pissed off and turned their backs on them. I was considering an international account with Barclays, until reading, hidden in the small print, “…products + services… in particular, not being offered in Japan or United States or to US residents”…
2) If you’re lucky enough to know someone in UK, some banks there might let you open a Joint Account, you with US address and them with UK address. I have a brother in UK, but don’t want to add to his tax/finance complications; and then what if he died?
3) Researching some Brit ex-pats-no-longer-living-in-UK websites, a couple of people made comments saying they simply walked into such-and-such bank while in UK (Bank Of Scotland was one, I think) and were able to open an account, despite having no permanent UK address. In September I plan to try walking into every UK bank I see, and ask… But I hold little hope, as those comments were a few years old.
4) Guess I’ll walk-in to HSBC too when in UK and see what they say…
Carolyn Burelbach says
Love this. You are such a wealth of information. Thank you for posting.
Looks like you have done your homework (no surprise). I’ll be anxious to learn what Class RV/Motorhome you decide upon. My guess is a Mecedes Sprinter Van because of its width and the infrastructure in Europe. My days in Europe and the Mediterranean where in the late 50’s while in the military so things have changed but the small older established towns I suspect have not and the roads remain narrow.
I have and always will look forward to your newsletters with enthusiasm not to mention the education I receive based on your travels and knowledge. Your reporting format and structure is so easy to follow.
All the best to you guys and I look forward to more.
We’re narrowing down our RV choices for Europe, but it’s all “couch shopping” at this point, so we won’t know for sure until we actually get there and get inside some of the models to check them out. It’ll be a small RV (we’re aiming for around 7 meters) and most of the ones we’ve drooled over so far have been Fiat Ducato. But, all might change once we get there and actually see them. It’ll be interesting, for sure!
Hi Nina, I have a Mclouis 76G, 7.54m, central bed, lovely RV.
As others have said, this is one more rather amazingly informative post. You really tackle problems head on and delve deeply with an analytical mind. Thank you. I am inspired to research another credit card that will offer us more specific benefits.
Excellent! I feel a few good credit cards is all you need, and with the right features you’ll save a ton of fees over the long term.
If you want no-cost currency transfers, ofx.com is the best I’ve found. I’ve used it a few times now for CAD -> USD. Their spread is very small, and they don’t charge transfer fees (but the banks might) if you transfer over a certain amount (I think $10K USD). It does require you have two bank accounts, one each in the currencies you’re transferring between. It’s the cheapest I’ve found outside of doing Norbert’s Gambit.
Bill Cooper says
My family lived in the UK about 10 years ago while I was on an expat contract with a major bank. I’m sure you know all of this, but this was our experience. Opening a checking (or current account) is much more difficult overseas. I had to physically visit the bank and show them my employment contract. They are more concerned about money laundering overseas and want to insure you actually have a job and address in country (at least they did 10 years ago). If you keep your money offshore you will only be taxed on any income you bring back to the foreign country (at least for the UK). We decided to open an account with a global USA banks which enabled us to move money back and forth much easier. I could wire money from the US or UK and have it in my other account within 12 hours or less. In the UK, they don’t use your NI number to track your credit. You need to have a history with a UK address. I had to open my first credit card with the bank where I was employed. I couldn’t do it any other way. I’m sure things are more flexible now, but it was more difficult than opening accounts in the USA. Remember, you will also need to claim any income you make in the UK or other countries (even interest or investment income) on your US taxes. The US taxes on worldwide income.
Keep in mind, everything moves MUCH slower in Europe. If you think it will take 2 days, it will take a week. Don’t expect to get much done during the August holiday season. This is when the kids are out of school and everyone goes away.
I hear you, and am familiar with some of those regulations from the last time we lived in EU. Things have loosened a tad in the last 10 years, but it’s still not completely straight forward. I know someone (who does not currently live in UK) that was able to open an account in UK last year using just a (local) relatives address. However only one bank allowed it -> HSBC. The other banks did not.
Still it’s never straight forward.
And yes, also very familiar with the tax implications of living abroad. The US is one of the few countries that taxes on worldwide income. So all money kept or made abroad must be declared. There is however a (rather large) foreign earned income exclusion, and you get a credit for any foreign taxes paid too. So it’s not quite as bad as it sounds (for those folks not familiar). But the obligation to file taxes in the US never goes away….
Mick Tinker says
Great article. I was ready to chime in with advice when I started reading, but you nailed it and more! As a mixed USA + UK family Schwab & Transferwise are our go to services.
And thank you so much for your blog, can’t wait to follow your European travels.
Cheers for chiming in with your experience. Schwab and Transferwise are a great combo.
I’d love your advice on my situation. I’m planning on moving to France (for the unforeseeable future) and I’d love to maintain my US credit card due to the travel points I receive. I have the Capital One Ventures card which has no foreign transaction fees. However, correct me if I’m mistaken, I believe it’s easier to pay off the CC bill with a US bank account?
Reading your article, it seems like a Charles Schwab account would be ideal. However, what would you recommend bank-wise for when I start working in France? Ideally it would have little to no wire transfer fees so I could wire money from my French bank account to my Schwab account to pay off my US credit cards.
HSBC sounds perfect but I don’t make enough to meet HSBC Advance’s minimum. Thoughts on which bank I should go with? Or perhaps you have a better solution?
Thanks so much for writing all of this!
YES, it’s most definitely easier to pay off your US credit card with a US bank account. So I would recommend maintaining a US bank account for that purpose.
Regarding the bank account in France there are NO banks that I know of which offer zero wire transfer fees EXCEPT HSBC (and you’ll need to get yourself an account in both USA & France in order to take advantage of that). If you plan on doing regular transfers between accounts in US & France it’ll be one of the easiest solutions.
You can also transfer money back to the US with a company like Transferwise (it’s a super easy solution), but you’ll likely still be charged some kind of fee to get the money from your local account to Transferwise. Plus there may be a wire acceptance fee for your bank on US side. I don’t have enough details on the French banking side of things to be able to tell you which bank here would offer the lowest fees for this in France (I’m still learning), but on US side you can find a full list of wire transfer fees here:
Amanda Noble says
Very helpful. Thanks. I am moving to Europe next year.
Lyle & Jan Huff says
Hi, maybe this isn’t the right place to post but France is in the EU Schengen area. How are you dealing with the 90 day EU stay limit. We traveled for four months in Oceania and used only a Chase Sapphire and Fidelity debit card. Auto paid the balance monthly and reaped the travel points to keep going.
Love your blog,
Lyle & Jan
Lyle & Jan Huff says
Sorry for early reply, I found your Schengen post and all is explained.
Glad you found it. I was just about to re-post the link.
In our case I still have my Danish Citizenship so I can stay and travel indefinitely throughout Schengen, but Paul (US Citizen) has to apply for a long-term stay visa. He can get one as my spouse that should (hopefully) allow him to live and travel around Schengen for the next 5 years or so. We started the application process right after we arrived in France and will see how it goes…