The best ways to access your cash when overseas
The eye-watering cost of taking out money overseas can put a damper on your holiday, but there are a few tricks to use to limit the damage.
WITHDRAWING money from an ATM overseas is an eye-watering experience.
On a recent trip to India, I discovered I could only take out 10,000 rupees at a time. The local bank whacked an extra fee on top, my bank back home stung me $7.50 for using a foreign ATM, and then another $5 in ‘‘offshore service margins’’. To add insult to injury, the exchange rate was considerably worse than the actual interbank rate.
By the time I wrestled my measly $200 out of the machine, I’d paid $16 in various fees. Comparing this experience with an unplanned colonoscopy I’d endured earlier that day, it’s hard to say which was more violating.
If you’re not careful, 5 to 10 per cent of your spending money will disappear into the banks’ pockets before you even get the chance to see it. Fortunately, there are a few tricks that can limit the damage.
First, make sure you have the right bank account. If you’re heading to Asia or the Pacific, ANZ has a decent network of ATMs you can use for free – a fact I only remembered after I’d already left home, and saw the familiar logo pop up in Cambodia.
Westpac is a better fit for the US and Europe, because it’s part of a global alliance network with 50,000 ATMs operated by the likes of Bank of America, Barclays, and Deutsche.
Ditching theATM fee is a good start, but you’ll still have to pay a hefty transaction levy. ASB has an unusually low rate of 1.1 per cent, which actually makes it the more efficient choice if you’re able to withdraw more than $500 at once.
If you can’t find a fee-free ATM, take out as much cash as you feel safe carrying in one go. It pays to shop around, because local banks have varying withdrawal limits, and bizarrely, sometimes even different machines from the same bank.
Wherever possible, pay for stuff online so you don’t need as much physical cash in the first place. Credit cards generally have the best foreign exchange rates,
By the time I wrestled my measly $200 out of the machine, I’d paid $16 in various fees. Comparing this experience with an unplanned colonoscopy I’d endured earlier that day, it’s hard to say which was more violating.
which is handy for booking things like accommodation and transport. If you’re really lucky, some sites will even let you pay directly in New Zealand dollars.
Money changers should be avoided at all costs. Change some money before you leave home, at the best rate you can find, then head straight to the ATMs once you’re abroad.
There are a couple of alternatives. Banks and airlines promote ‘‘cash passports’’, which let you load on a bunch of different currencies in advance, and sometimes get free ATM withdrawals or rewards points.
Those features are ruined by the insultingly bad foreign exchange rates on offer, as well as a host of fees that might include charges for set-up, closure, inactivity, and reloading more money. If you’re going to be away for a long time, in a country where cards are widely accepted, they might just edge out the standard ATMoption. Otherwise, it’s hardly worth the bother.
If you have local friends, the best possible option is to wire them cash using a service such as Transferwise, and then get them to withdraw it for you for free. This is what I ended up doing in India, and I even opened my own bank account in Thailand for the same purpose.
To be honest, it’s pretty hard not to get shafted here. As long as the big banks are in power, all you can do is grin and bear it. But there is hope on the horizon.
My European friends all carry the Revolut card, which converts your money at the actual interbank rate, and gives you limited free ATM withdrawals. Revolut isn’t available to Kiwis just yet, but it is collecting early registrations. Transferwise has just launched its own debit card connected to a ‘‘borderless’’ bank account, which will hopefully arrive in our fair land in the next couple of years, and a few other players are making promising noises.
Next time you’re heading off on holiday, do whatever you can to minimise the fees, then grit your teeth, and think of the open banking revolution that’s coming.
Got a money question? Email Budget Buster at richard.meadows@thedeepdish.org, or hit him up on Facebook.