Are A.T.M. cards the best value?
Replies: 15 - Last Post: Feb 8, 2013 7:49 AM Last Post By: Meka
Dec 11, 2012 4:50 AM
Are A.T.M. cards the best value?Ironically I'm a seasoned traveler and have always simply withdrawn money using A.T.M. cards abroad, but before embarking on a big trip I just double checked to find that my Irish bank now charges 3% per foreign transaction and my Spanish one (I live between both countries) charges 4%. That's a huge fee.
I am correct in saying that foreign banks will generally charge too? Is that a percentage fee or a set fee or can it change?
Also I am correct in saying that the foreign bank will give you less than the exact exchange rate?
I used not worry too much about the two latter charges, figuring it was the cheapest way regardless, but added to 3 or 4%? Could I end up losing 6 or 7%? If so, would money transfers be better or is there an alternative? You'd need a financial consultant to work the whole thing out.
Dec 11, 2012 5:16 AM
1You need to open an account with a bank that charges lower or no fees.....have a look at the offers in your country (I'm not familiar with Irish banks).
You should be able to get a much better deal than that...
Anyway,you will always pay..local ATM fees (usually a fixed fee per transaction) and of course you will 'lose' something on the exchange rate (as you will whichever way you change money...using those prepaid cash passports gets you even worse exchange rates,for example).
Dec 11, 2012 6:28 AM
2Thanks. I figured I was right in that you'l pay something on the exchange rate but that you'll lose that regardless and that the local banks charge a set fee which is insignificant as long as you're not taking out small amounts of money frequently. Good to verify that. I had thought that your home bank also charged a set fee but obviously not. I'll fish around so.
Dec 11, 2012 7:30 AM
3lucapal has summed most of it up already. Ideally you want a card that charges 0% transaction fees, 0% handling fees and 0% cash withdrawal fees. There's only a couple of banks that offer such cards in the UK (Metrobank & N&P), but I'm not sure about Ireland.
Another possible way to withdraw money is using credit cards and cash advances, then pay off as soon as you can. As long as they have similarly low fees you pay only x/365th of the APR. E.g. if you withdraw £1000 on a CC charging 20%APR then repay it the next day you'd get charged 1/365th of the APR, 0.05%, which is about 50p. It's often a reasonable alternative to DCs.
Dec 11, 2012 12:06 PM
Dec 11, 2012 3:51 PM
5#5 just googled halifax clarity card and it says you must be a UK citizen though Lloyds are the same company so I'll ask them tomorrow.
#4 I'll have to research that and maybe get back to you.
- 3 this is interesting but I'm not sure I understand it all. Are you saying that credit card withdrawals don't generally incur the same fees as normal debit cards? In which case if my credit card account was in the black for the amount I was withdrawing or my bank accounts were set up in such a way that my current account would automatically pay off my credit card (which it is) that I would incur tiny fees?
I've never owed on a credit card so not familiar with mechanisms. The 1/365th? Is that working on the basis that you'd be charged interest per day and that you'd be in the red for only one day? I thought you were charged an APR at the end of the month/period if you hadn't paid it off.
This option looks promising so if you could simplify it for me it would be much appreciated.
Dec 11, 2012 4:43 PM
Lot's of credit cards charge the same as DCs but there are some with a similar lack of chargers. Halifax Clarity and Aqua card are the two that I seem to remember that are especially good for use abroad. But I'm not sure if either is available in Ireland, sorry.
As for the second bit, some people say they use CCs as much better prepaid cards. So they pay money to it in excess of any charges, and leaves it with a positive balance to withdraw as you would via a DC, and if your account has zero overseas fees and zero load fees you would get your money for free. However, this is against most Tees and Cees though so could leave you vulnerable if the bank decides to close your account.
The explanation was the idea that I was suggesting. That you make a cash withdrawal, so you are -£500 for example, then you pay it off as soon as you can. If you have the right card you will be charged interest only until the balance is paid off. So if you only take one day you pay 1/365th, if the transfer takes a while it could be 3 days until it is paid off so you would pay 3/365th. It is still a relatively small amount though so is often a reasonable option.
The 0.5% was actually a mistake. It should be 0.05%. It comes from,
If you have card X with an APR of 20% on cash withdrawals then you get charged 20% per year. If your T&Cs for cash withdrawal say you are charged interest until the balance is paid then you pay 1/365th of the APR per day. So if you take 1 day to repay you pay the balance + 0.05%, 5 days you pay the balance + 0.27%.
I'm not entirely sure quite how clearly I'm explaining this so give me a shout if I'm doing a bad job.
Dec 12, 2012 2:13 AM
7You're explaining it well. And much appreciated. It's my foundation knowledge is sketchy as I've never owed on a credit card. So let me explain/verify.
Firstly and probably most importantly. Are you saying that some banks will offer "free" as in in zero commission or lower commission on credit card withdrawals than on debit card withdrawals in which case I need to ask the bank? I'd assumed it would be the same.
As for credit card charges. My bank account in Ireland is set up that I have the option to automatically transfer 25%, 50%, 75% or 100% of my credit card debt from my current account at the end of each month assuming I have enough. I've taken the 100% option and have always had enough so I've never paid interest. I've always assumed that the bank was legally obliged to offer this or why else would they? Are you saying that some Terms and Conditions don't allow this? That you will always pay some interest if you use a credit card! Is that what "loading" is by the way? Putting your credit card account into the black so you can use it without owing interest?
Also, my understanding of APR on credit cards was that if you were in the red on a certain date (in my case a full month after the month of withdrawal) that you paid your APR on that amount. So if I withdrew 500 euro and on the last day of the next month still owed it that I would owe (let's say APR was 20%) the 500 + 100 (20% of 500). That figure wouldn't change until the same date the following year in which case if I hadn't paid it, I would then owe 600 + 120 (20% of 600).
Are you saying that some (or even all) credit cards charge the APR at a daily rate. That if I withdrew 500 euro that they'd charge me (let's say) 20% of 500 which is 100, divided by 365 each day, making it 27 cents a day until I paid it off? Is that what you meant by 27%? Cos my maths makes it 27 cent so I'm guessing we're talking about the same thing. If these two types of APR calculation exist is there a term to differentiate (for asking my bank) between the two? Compound and flat rate perhaps?
I still don't get where the 0.05% comes from.
Dec 12, 2012 6:38 AM
Dec 12, 2012 6:44 AM
Dec 12, 2012 11:46 AM
10#'11 can you clarify something for me. The cards in this link . http://www.moneysavingexpert.com/travel/cheap-travel-money. The Halifax Clarity Card. This is just for Halifax clients I presume? Or can anybody get one.
As for the prepaid cards, FairFX and the rest below that? This looks like something I've somehow managed to miss all of my life. Am I right in saying that these cards aren't affiliated to your bank account? They're independent companies? You transfer money into them and use them as credit cards external from banks? Are they affiliated to certain nations or are they international? If they are independent and international, are they quick and easy to set up?
Dec 13, 2012 12:33 PM
11I think the answers to your questions are covered on that link Stevo52.
Halifax probably requires that you are a resident of the UK. But if there is a Halifax bank in Ireland (I don't know), then presumably a resident there could apply there.
Pre-paid cards are better than cash or travellers cheques. They are NEVER better than one of the better regular bank cards. Basically, pre-paid cards only make sense if you have a poor credit rating and cannot open an account and get one of the better 'normal' credit/debit cards.
A bank that offers you a really good deal on a card to use when travelling, like the Halifax Clarity card, does so in the hopes that they will also get your banking business when you are living at home. If that happens then they make some money in the normal way a bank does when you bank with them. So they are looking at a 'win-win' scenario.
A pre-paid card does not have the option to make money from your normal banking so guess where they must make their money? Uh huh, on the use of the pre-paid card. There ain't no free lunch in this world. So it only makes sense that the pre-paid card is not going to be as good a deal as a card like the Halifax Clarity.
Dec 13, 2012 12:49 PM
12Stevo @ #8
Some CCs have fees/chargers that work out at the same sort of level as the best DCs. DCs I believe will always be better, but the two best debit cards, from Metrobank and N&P, are not available everywhere. It's really a question of looking at the best options you have and comparing.
The Halifax Clarity, for example, has no cash withdrawal fees, or foreign currency transaction fees. So all you get charged is the interest. The current accounts offered by N&P also have no fees for overseas cash withdrawals, purchases or handling fees, but in this case you don't have to pay interest because it is your money.
Now for the interest charges on CCs. For the clarity it states you pay interest from, 'date debited to your account', to date 'paid in full.' And the monthly interest rate is between 1.017% and 1.667%. Now if you pay it off in 5 days you don't get charged the whole months interest, because you only took 5 days, so you would be charged 5/(number of days in the month)th of the interest rate. But you would have to organise a transfer, a doddle on online/telephone banking. Not all cards will charge you in this way, the Clarity does and that is partly why it is a good card.
What I'm saying the T&Cs don't allow is paying in excess of your debt. So if you buy £5 of stuff and pay £10 (again you would have to manually, not automatically) then your CC would be in credit. This is not allowed, although some people do it and say they have done for a long while.
A loading fee is a % they charge on the exchange rate, important to look for what it is, as has been mentioned. A lot of prepaid cards tout brilliant exchange rates, that is until you chop off the 3% load they charge.
Dec 13, 2012 2:35 PM
13#13 and #14 sum it all up. As I always did, the long and the short of it is that debit cards are the best card option. It looks like I'll have to make do with my bad Irish rate which totals 3.5%. None of the Spanish or Irish banks seem to do any better than that and at this stage, the hassle of setting up a new account to save less than a percent isn't worth it.
Thanks for all the help. At the very least I'm significantly more educated on the subject than before.
Feb 8, 2013 7:38 AM
14I've been following this debate for over 10 years and it always boils down to do your research with your home town banks for the best deal. ATM's used to be great but when the euro was introduced banks lost out bigtime and started to increase the fees and the margin on exchange. CC purchases were also fee free once upon a time but you know commonly find a 1-3 % overseas tx fee.
There are 2 traps. Obtaining a cash advance typically eliminates your 55 day interest free period on purchases. Not always but often. It is years since I have cash advanced a CC and banks often charge a flat fee for cash advances which is typically 1%+ combined with a 3% overseas tx fee + 20% p.a. interest .. makes cash look good.
Seriously tho bank fees account for maybe 2% of a travel budget .. accomodation and travel burn 60-70% so focus on those items and take a good debit card with a CC card backup for purchases and plan your ATM withdrawls so you arent making too many small wthdrawls because the local banks often have a 2-3 euro fee for their ATM which simpy gets added to whatever you withdraw.
Your biggest advantage is that the Irish is part of euro land so the expensive bits of europe have no exchange risk!
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