“Hey! Any tips for traveling abroad?”
Oh yea, get the Charles Schwab debit card! No fee anywhere in the world you go! It totally changed the way I carry cash when our family travels. It works like a debit card from any major bank (Chase, Bank of America, Wells Fargo,etc) except you can use any out of network ATM and any fees that the machine charges you will be reimbursed by Charles Schwab at the end of the billing cycle. Best of all, it doesn’t cost you anything (except a hard credit report inquiry).
REFERRAL LINK: REFER6FCJGFD3 (full disclosure: I do not get anything for you to sign up through this link. You, on the other hand, receive $100)
These are Schwab’s own words: “We hope your enthusiasm for Schwab’s award winning customer service and our low fees makes you excited to share how we can help your friends and family on their financial journey.”
Schwab Debit card is a Gamechanger
One of our past major concerns when traveling was where do we go to get the best cash rate exchange. It’s no secret that those airport currency exchange booths hike up the exchange rates with tons of fees. Some advocate making currency exchanges before leaving the country to avoid using the airport booth. But the next question is how much should we withdraw? The cash needed for a 3 week trip is much harder to estimate than a one week trip, especially since I prefer to put most if not all of our spending on credit card. The Schwab debit card essentially eliminated any cash hassle from traveling. In 2018 we traveled to 3 different regions of the world (New Zealand in Oceania, Japan in Asia, and Spain in Europe) plus some domestic travels to San Francisco and San Jose. Never once did we have to go to a bank to get some yens or euros prior to leaving the country. We simply walk up to a local ATM outside the airport when we arrive at our destination and withdraw enough cash for the next 2 days and the repeat as necessary.
The most common fees* when exchanging money are:
- Exchange rate fee (0.25%-6%)
- Foreign transaction fee (2-3%) charged by the bank/credit card company
- Dynamic currency conversion (avg 8%)
- ATM out of network fee (usually a fixed amount like $2-3)
Schwab debit essentially eliminates all such fees from the list.
Schwab debit card is perfect for day to day cash spending.
When we were in Japan for 3 weeks, we didn’t have to estimate how much we would spend daily and withdraw a large wad of cash to carry around as we travel around the island, especially since Japan is known to be a cash-based society and not all vendors accept credit cards. Schwab debit card made it easy for us to withdraw about 100,000-200,000 yens from the ATM at a local convenient store like Lawson, Family Mart, and 7-Eleven, which are all over the cities. We then spend down the cash in the next few days until we need more again.
Schwab debit card is perfect for emergency cash spending
Someone broke into our car in New Zealand and took our all belongings, including our passports. After sorting out all the paperwork at the embassy, we were told that we needed around $300 USD cash to purchase our replacement passport because the embassy didn’t take credit card. It was as simple as going down to the first floor and finding the closest ATM and withdraw the amount we needed.
Schwab debit card is even useful for domestic travels.
Have you ever been in an unfamiliar neighborhood and needed cash for valet, tip, or other miscellaneous cash spend (or that one brunch place in SF that doesn’t take credit card!) but there’s no [insert major bank name] within sight or requires you to take a Uber/Lyft detour? Nowadays, I just need to pull out my Schwab debit card and withdraw money from whatever ATM in sight, including those shady ones in the local convenience stores (with precaution that the machine hasn’t been tampered with, of course). Because at the end of the month, Schwab would reimburse all the fees charged by the ATM.
At the end of the day, you Inevitably will end up at a restaurant or shop that only takes debit card. You WILL need and SHOULD have a debit card in your wallet. So rather than trying to figure out which bank (i.e., Chase, Bank of America, or Wells Fargo, etc) will give you the best ATM access, Schwab offers the most flexibility as the one debit card to rule ’em all… errr, I mean, to be accessible most universally.
Okay. What’s the catch?
You have to open a brokerage account plus the checking account to get access the no fee debit card. A brokerage account is an investing account for buying and selling stocks. But for our purposes of withdrawing cash as a debit card, you don’t need to use the brokerage account at all nor keep any cash in that account. Not only is there no catch, if you’re a new customer, you can even get $100 sign up bonus. It really doesn’t get any better than this!
But really… what incentive does Schwab has for providing this free service?
It is definitely in Charles Schwab’s interest for you to be familiar with their banking system and investment platform so that you will eventually be one of its clients. To be honest, it worked on me. I’ve interacted with the Fidelity, Vanguard, and Schwab platforms and find Schwab to be fairly intuitive and have used their platform for trading stocks as a resort of having this account.
For full disclosure, my main personal bank is NOT Schwab. As a checking account, it doesn’t offer the highest interest rate. I only use Schwab to keep a small pool of cash for ATM withdrawal but keep the majority of my cash in a separate checking/savings account for the best high yield savings interest rate.
*Here are more detailed descriptions about the fees:
Exchange rate fee (0.25%-6%)
This is the fee that is often invisible to the consumer and really out of our hand. This is the fee often marked up at the airport currency exchange booth because they know they have you trapped like a rat in a maze. A quick Google search for foreign exchange rate should give the best rate and help you figure out the mark up. This is also why you can withdraw the same amount of money from the exact same ATM but receive a different amount on a different day. I believe Schwab doesn’t actually charge a rate and so doesn’t pass this cost onto the consumer from my online research but wasn’t able to confirm it. Whenever I calculate the rate I received from the exchange, it is usually accurate up to the 100th decimal point.
Foreign transaction fee (2-3%) charged by the bank/credit card company.
Many credit cards now advertise and offer no foreign transaction fees. There is absolutely no reason in this day and age to pay this fee when so many fee free credit cards, including the Schwab debit card, waive this fee.
Dynamic currency conversion (wiki link) (8%)
Have you ever purchased something internationally and been asked by the cashier if you would like to purchase using the local currency or USD? The correct answer should always be local currency to avoid the dynamic currency conversion charge. It irks me how insidious this fee can be since most unaware travelers may opt for USD (or their home currency) because we all find it easier to understand the value of something in our own home currency. I find that in most countries, the cashier would usually ask which currency we prefer first. However, more than once in South Korea, the cashier politely, without asking, selected USD instead of WON. I’m guessing she probably thought we as Americans preferred to see the charge in USD. I have to quickly stopped her and request Won instead.
ATM fee – charged by the local bank when using an out of network card.
This is common both domestically and internationally. If you hold a Chase ATM debit card, you can’t go to Wells Fargo ATM to withdraw money without paying an out of network fee. And this is even more common seen at a local ATM at a convenient store or bar. When you use the Schwab debit card, you will still be paying the fee upfront. For example, you withdraw $40 and you get charged $43 because of the $3 out of network fee. Schwab will reimburse that $3 at the end of the month to your statement.
TL;DR: Schwab visa debit card provides easy access to cash at a local ATM wherever you go in the world without getting ripped off by fees.
FAQS:
Can I deposit money with the debit card when I’m in [insert country]?
No. You can use the Schwab debit card to withdraw cash from a Chase ATM but you can’t deposit money back in because you don’t actually have a banking relationship with Chase. Schwab simply reimburses the out of network fee on your behalf when you use the an out of network ATM (like Chase, for example).
Can I withdraw more money than I have in my Schwab checking account?
No. This is not a loan or a credit line. The debit card gives you access to money you already have. So if you anticipate spending $500-$1000 oversea, you want to make sure you have at least that much money in the account. The advantage is that you don’t have to withdraw/exchange more than you might use or end up carrying hundreds of dollars in your wallet.
What are the hidden fees? E.g., How much money do I need to keep in the accounts to avoid fees?
Schwab doesn’t have a minimum balance requirement and doesn’t charge a monthly statement fee. The only con I can think of is that Charles Schwab does a hard inquiry pull on your Experian credit report.
Do I have to open a brokerage account along with the checking account / do I have to invest with Charles Schwab?
Yes, you have to open both a brokerage account and a checking account to have access to the fee free ATM debit card but there is no monthly fee or minimum balance requirement. You do not have to invest with Charles Schwab’s brokerage account or even keep any money in that account, but Schwab does have a good platform comparable to Fidelity and Vanguard.
This is too good to be true, is Schwab the only option?
Actually no. Other banks with this feature that I know of are Fidelity and Capital one. But do your research. I think some have a maximum of $30 reimbursement amount.
Do I have to use your referral link?
No, in fact, I don’t get anything from you using my link. Schwab, in its own words, states “We hope your enthusiasm for Schwab’s award winning customer service and our low fees makes you excited to share how we can help your friends and family on their financial journey.” So no, I have no financial incentive to promote Schwab debit card.
Anything else I should know?
- You should set a travel alert with Schwab when traveling to make sure the bank knows where you are. If the bank freezes your card because it believes there are fraudulent activity, you will be stuck without any cash.
- Keep in mind that some countries like South Korea and Japan may not have 24 hours access to an ATM.