Foreign currency exchange is one of the biggest rip-offs a traveler is likely to encounter, closely followed by credit card machines that offer Dynamic Currency Conversion (which is also a scammy sort of offering you’ll find on some ATMs now). Greg’s post yesterday about his New Zealand trip reminded me that we needed to publish a post about the Schwab Bank Investor Checking account and why you want that account and its associated debit card if you frequently travel overseas (or something just like it). This debit card account reimburses ATM fees worldwide and has no monthly fees or foreign transaction fees, ensuring that you’ll get an exchange rate much closer to the actual current rate than what will be offered at the foreign exchange desk.
- The Schwab Bank Investor Checking account is a great account for frequent travelers because it features no monthly service fees, no account minimums, and no foreign transaction fees. Furthermore, it offers unlimited ATM fee reimbursements
- Direct link to this deal (Greg’s referral link, which can earn you some extra cash if you’re planning to make a large deposit in your new checking or brokerage account. There is no bonus for the person referring you, but you only get the bonus money if you open through a referral and meet the deposit requirements).
Key Account Details
- You get both a Schwab Bank Investor Checking account + Schwab One Brokerage account
- $0 monthly service fees
- $0 account minimums
- Unlimited ATM fee reimbursements
- There’s no catch. It’s just that good.
Travelers want a Schwab checking account and Schwab debit card
First of all, let me be clear that there’s nothing in it for us in posting this. I’ve included Greg’s referral link above because the only way to get a bonus upon opening and funding your new Schwab account is to open through a referral from an existing customer, but there is no bonus for the person referring you (Greg doesn’t get anything when you sign up). We include the referral so that you can get a bonus if you plan to deposit enough money to earn one (and if you don’t plan to deposit enough — the minimum to earn a cash bonus is a deposit of $25,000 to get a $100 bonus — then there’s no harm to you for having signed up through a referral).
Furthermore, this post is not news for seasoned travelers who have been in the game for a while, but we realized that we had never explicitly posted about the Schwab Investor checking account.
Don’t use the airport currency exchange booth to get foreign currency
First of all, you need to know that airport currency exchange desks are typically a big ripoff. When you exchange at one of those booths, you’re typically getting an awful exchange rate and paying a high commission fee that’s costing you far more than the service is worth. It’s something I’d do (and have done) in a pinch if I really needed local cash and couldn’t get the ATM to work or had lost my card, but it’s not a good choice. The commission fees are ridiculous. See this story from someone who did an experiment where they started with $100 and a goal to see how many times they could trade currency. They pretty quickly had less than ten bucks left thanks to high commissions on each trade.
Instead of going to the currency exchange booth, you’re typically better off withdrawing local cash from a local ATM. Most US-based bank accounts will give you the correct exchange rate without charging a commission for converting your US dollars to the local currency.
Key pitfalls to avoid with foreign ATMs and currency conversion (and how the Schwab debit card can help you avoid them)
There are several important things to watch out for:
- ATM fees: Most ATMs charge a fee to withdraw, so this fee will typically get passed on to the account from which you’re withdrawing cash. The Schwab Debit Card offers unlimited ATM fee reimbursement worldwide. In other words, if the ATM says it has a fee of $5 to withdraw, Schwab will reimburse that $5. You don’t need to worry about that fee when withdrawing from your Schwab account.
- Foreign transaction fees: Many regular bank debit cards will add a foreign transaction fee. The Schwab debit card has no foreign transaction fees.
- Dynamic currency conversion: This is when the machine you are using gives you the option of charging your account in local currency or US Dollars. Always choose local currency. For years, we only saw this option appear on credit card machines (after you swipe or enter or tap your card, you’ll sometimes have the option to pay in local currency or your home currency — watch out for merchants who may try to quickly make the selection for you), but we now see this practice spreading to ATMs. When you choose “US Dollars”, the machine is doing a conversion at a bad exchange rate and overcharging you — essentially baking in a hidden fee. Always choose local currency.
- Watch out for ATMs that don’t clearly disclose dynamic currency conversion. Those blue and yellow Euronet ATMs that you see in the most touristy locations all over Europe typically offer exorbitant fees and ridiculous conversion commissions. It may look like you’re taking out Euros, but see the fine print and make sure you’re not being charged in excess of 15% plus a 5 Euro fee to withdraw. Personally, I avoid these machines like the plague. I found some similar machines in another European airport this past year and had to hunt around a bit to find a more “legit” Citibank ATM.
A Schwab account has other benefits, too
There are several other reasons why you may want a Schwab account or find it useful.
First of all, the debit card comes with a number of purchase protection benefits that are typically reserved for credit cards. While I wouldn’t generally advise using a debit card to make purchases, the Schwab debit card still features price protection, whereby if you purchase an item and it drops in price by up to $250 per claim (and up to $1,000 per year) when an eligible item you purchased is found for a lower price within 60 days of purchase. Purchase security covers you for up to $500 per item and up to $50K per year in the case of theft or certain types of damage within 90 days for items purchased with your card. Read more about card benefits here.
The other key benefit that may appeal to credit card enthusiasts is that you’ll need a Schwab account if you ever decide to apply for the Schwab Platinum card.
This is an additional flavor of the consumer Amex Platinum card, which features nearly identical benefits and features to the “vanilla” Platinum card, but it is handled as a separate product (in other words, you are eligible for the welcome bonus on the Schwab Platinum card even if you’ve gotten a welcome bonus on the vanilla Amex Platinum card before). The key differentiating feature of the Schwab version of the card is the ability to “invest with rewards”, whereby you can redeem your Membership Rewards points for a deposit in your brokerage account at a value of 1.1c per Membership Rewards point. If you find yourself flush with Membership Rewards points, this can be an appealing redemption. For more detail on this redemption, see How to convert Amex Membership Rewards to cash with the Schwab Platinum card.
There’s really no downside that I can see to having a Schwab account and unlimited ATM fee reimbursements is certainly a great benefit to have, particularly when traveling overseas and withdrawing cash. Like Greg, on many of my most recent trips I have found very little need to have cash at all, but in those situations where I need it I enjoy carrying a debit card that offers ATM fee reimbursements worldwide. I actually have an old SoFi debit card that is grandfathered in to a policy that offers unlimited ATM fee reimbursements also, so I often carry that, but my wife has a Schwab account and thus we also have her debit card with us as a backup when traveling abroad. Either way, having a debit card with ATM fee reimbursements, no monthly minimums, and no foreign transaction fees is a key to avoiding the ripoff that is the airport currency exchange booth. If you don’t already have an account that offers these benefits, I certainly wouldn’t hesitate to recommend a Schwab account — whether you open it now or sometime before your next international trip.
I also wanted to mention that Schwab doesn’t charge anything for incoming wires including a foreign transaction fee.
It’s incredibly freeing when traveling overseas to be able to take out foreign currency in small amounts as needed rather than try to game out large amounts to minimize fees.
Another really helpful post! Thank you!
Has anyone with the old SoFi account ever been charged the 0.20% fee mentioned below? You have to login and look at account details to find it:
“SoFi Securities does not charge foreign transaction fees when you use your SoFi Money debit card abroad. However, Mastercard may assess a 0.20% foreign exchange fee which is not reimbursed.”
i have the sofi card i dont think it charges me any fees
While I usually don’t convert, I carry an emergency USD back-up. I was just in Japan, which still can be pretty cash based, and I was running short on yen my last night. I was having trouble finding a non-domestic card accepting ATM which did not have a ¥10,000 min, but there was an automated exchange machine which gave a rate as good as ATMs, no fee.
May not hurt to have some holdover yen, but plenty of other situations to have contingency plans in place.
I’ve had this card for over a decade. The most significant benefit is I can withdraw in small amounts since there’s no ATM fee to justify and I’m not left with local currency when I leave. If I’m not traveling, I keep about $100 in it. Just be aware that it takes a number of days for a deposit to clear–I load it for travel at least a week before I’ll need to withdraw (I think a small percentage is available immediately, but I just have the load on my pre-travel to do list). Only had a problem using it one time, many years ago in Taiwan. All ATM fees reimbursed. Love this card!
Ditto to all Jan said. I’d also add that my debit card expired without my knowledge and they did not automatically send me a new one since it had been over 18 months since I’d used mine. Sadly, I was at HKG at midnight after a very long day of travel when I realized this. I had to use the cash conversion at the airport because the cabs there didn’t accept credit cards. Of course, discovering all of this took over an hour and resulted in me overpaying for a long cab ride to kowloon. (It was also a nightmare cab ride and more antics ensued but that’s another story.) Moral: Check that expiration date the month before you leave the country!
Leaving for India in two weeks. You just made me de-sock-drawer my cards! Expiration dates ok. Whew…
Not exactly the same thing, but the Wise app is a nice way to exchange currencies as well. You get a debit card and can automatically convert currencies at pretty low rates. Curious if others have found this useful.
Hey Chris, Can you tell us more about this Wise debit card. Is Wise like a bank?
Thanks! ( Not a seasoned traveller )
Sure. At a high level, you load up this app with money in your local currency. Then you can instantly transfer it into any of their supported currencies. They give you a debit card to use when you travel, though I don’t know the ATM network compatibility. Essentially, you have a local bank account for the countries you’re traveling to. So you can hold onto funds in different currencies. During this period where the dollar is strong, you can even play some arbitrage for a future trip. My friend has used it for trips to Japan and swears by it.
Thanks, Chris. Will have to check this out.
I really like my Morgan Stanley cash plus account for ATM reimbursement. They have next business day ATM reimbursement and no foreign transaction fees. Also has a metal debit card.
PSA: Schwab shut down my brokerage and checking account after using the brokerage solely as a hub account for ACH transfers. I got a phone call asking what I was doing with the account and I was specifically asked if I was MS’ing, which was interesting. Granted, the ACH transfers were in fact due to MS, but they had no way of verifying that. Phone call ended on a “stop it or else” note and then a couple days later my accounts were closed. Didn’t have much time to stop what I was doing, they stopped it for me. Never did any investing nor did I get a chance to use the debit card for the free ATM feature. It was foolish to not be using the account in any way for its intended purpose, I acknowledge that, but unfortunate to get completely shut down without a chance to defend myself or adjust my behaviors.
Typically, if Schwab shuts you down, it’s for life. If you even try to open an IRA, I think you’re hosed. And, with its acquisition of TD Ameritrade, once accounts are merged onto one platform, you’ll receive a “dear John” letter.
I have TD and nothing changed not even my password So That’s Done and Over ??
Does anyone know if the Fidelity Cash Management account + debit card offers the same reimbursement? It looks like it does, but I’m not 100% sure.
Matt, see my comment immediately below.
Hold the phone.
The Schwab checking account’s interest rate is roughly 0.5 percent. No foreign transaction fee. Fidelity is sitting at about 2.2 percent. 1% foreign transaction fee.
How much is one going to keep on deposit? If you say $5k, Fidelity’s interest rate advantage earns $85 more. How much is one going to withdraw? If you say $5k, Schwab’s no foreign transaction fee saves you only $50.
While these numbers are well below the noise level for most, those who are concerned can take their pick.
Of course, then there’s the super secret cash account that earns nearly 4 percent and comes with a full ATM fee rebate and no foreign transaction fees. And, super efficient FX pricing.
Lee, thanks for adding to the discussion with the info , are you able to explain what you mean with the super secret 4% earning account, or am I missing a joke / sarcasm?
Frankly, I don’t keep that much in an account where I’m going to be carrying the debit card. I’m never likely to need $5K in cash at once – I just keep an amount in the account that should cover “cash emergencies” – more like $1K at any given time. The interest amount becomes fairly negligible – bit I wasn’t aware of the competing product from Fidelity, so I’ll have to check it out.
To cover the bases, Morgan Stanley and First Republic have no foreign transaction fee debit cards. Minimum balances are required. No meaningful interest. Not worth it. Hard pass.
OR you could have both the Schwab debit card for fee-free travel funds and the Fidelity account (or other, better account) purely for earning interest. ;-)’
I thought 1% FTF on Fidelity card only applies to purchases, not on ATM withdrawals. If you use Fidelity ATM card only for cash withdrawals it should be as good as Schwab.
Of course the real answer is you put the idle balance in a money-market fund until needed.
Not an issue for many of us I suspect. Personally, I keep less than $500 in each account and build them up as needed just before a trip. But, normally, since I’m using credit cards as much as possible when travelling, I only need about $100-200/week in local cash. And, tbh, that’s mostly to avoid the stick eye from cabbies. And, of course, the occasional glace, crema, etc.
Schwab is an excellent main account for a number of reasons.
Does Schwab have any advantage over Betterment, when it comes to global fee-free ATM withdrawals? I am trying to decide between the two.
I believe Betterment is only a select network, right? I can’t remember what that network is called, but it isn’t everywhere.
From what I understand, Betterment offers a Visa card (so same network as Schwab) and reimburses all the fees: 1% Visa fee, ATM fees, etc. I might be missing something, but not sure what!
You are indeed correct! I thought betterment was only Allpoint ATMs like newer SoFi accounts, but you’re correct it says any ATM that takes a Visa!
I have both, but I’ve barely used Betterment because their banking is lackluster. It requires a direct deposit in order to do mobile check deposits. Also, it lacks any kind of standard banking alerts so you won’t know if any transactions were made until you login to your account to check.
I have happily had the Schwab card for several years, but as I recall, the process of also signing up for the investment account was not seamless. Now I have that extra account, don’t use it and have no use for it.
also something that you did not mention.
Schwab is not the best in reimbursing atm fees – and you are forgiven as you say that you almost never use it.
I have used it in over 1000 different atms all over the world, and i would say about 10% of those have not been reimbursed. It is a royal pain to call and have the fees reimbursed – i have had to send pics of atm receipts. So keep your receipts, you never know when you won’t get reimbursed.
I’ve been using the Schwab debit card for years and have been very happy with it. I don’t recall ever seeing a fee that wasn’t credited, and I do check. Not saying you’re wrong; just my experience has been different.
I have a “To Do” list which I use whenever I travel, and one task on that list is to make sure I have enough money in the Schwab account connected to my Schwab debit card.
Also, the section on “Dynamic currency conversion” is super-important when using ATMs. And that advice is equally important when using credit cards at businesses in other countries, because more and more seem to be using banks that offer to do the conversion to USD, which will cost you dearly.
I’ve never have had an issue with them over many years and I’ve hit them HARD for ATM fees.
Cap One 360 Checking debit card is another one that charges no foreign transaction fee for ATM withdrawals. And where I travel (Italy) ATM fees have been mostly nonexistent, fortunately. I’ve only encountered maybe 2 banks that wanted to charge me a fee at the ATM. I canceled and went nextdoor to a different bank. (Always use a bank ATM, not some third party scalp-machine.)By the way, Cap One doesn’t hard-pull your credit report for this account. Schwab does do a hard-pull, I believe.
Interesting… Spain is getting to be a nightmare, and while France is still okay, the direction it is heading is not good.
Hopefully things haven’t changed since my last trip to Italy (2019).
Schwab stopped doing HP for new accounts.
I am so glad you posted this article. My wife and I have had the Schwaub card for years and it has saved us a lot of money. I don’t think we’ve ever had an ATM turn us down using this card. This includes use in North and South America, Europe, Africa, Bali, New Zealand, Australia etc. Making this visible to your readers is a great service. Keep up your great work!
The price protection T&C says it doesn’t cover prices advertised on the Internet. So it’s mostly worthless unless price matching a printed circular where the merchant refuses to adjust the price.
Is there a typo in the Dynamic Currency Conversion section? In bold, you say “always choose local currency” and then you end the paragraph saying “always choose your home currency.”
Whoops! Yes, that was a typo. I fixed that. Thanks for pointing it out!
@Greg — while in NZ and paying with a credit card, have you ever been asked to enter your PIN? One of the videos about NZ I had watched mentioned that oftentimes you get asked for a PIN so I wonder if I should actually set that up for my credit cards.
@Nick Reyes — thank you for the post! FYI, if you open a Schwab Starter Kit you can get $101 right now (this is an investment account) so I opened that first and then a opened Schwab Checking linking to that investment account. Not a huge bonus but it’s something 🙂
I find what the prevalence of tap to pay, the pin isn’t an issue anymore. On a trip to Australia a circa 2017, everyone was looking at me like I had six heads because my card wasn’t tap to pay.
Thank you, Nick!
I was never asked for a PIN but also I almost always used Apple Pay where that wouldn’t come up anyway
Thank you, Greg! Do stores in Aus/NZ also charge 2% fees for ApplePay as they do for credit cards?
Also, thank you so much for the very informative post/review of your NZ itinerary 🙂
I didn’t actually pay enough attention to that to know, but one person told me that they weren’t seeing that charge when they used apple pay.
Awesome! I guess I need to get with the times and start using Apple Pay 🙂