'No-Fee' Foreign ATM Exchange

Don’t Be Fooled by ‘No-Fee’ Foreign ATM Exchange Rates

We meet so many people who get fooled by ‘no fee’ foreign ATM exchange rate offers that we felt compelled to write this article about them.

Taking local currency out of an ATM is usually the cheapest and easiest way to get local cash in a foreign country.

And when you take money out of foreign ATMs they often offer you two options:

  1. Withdraw the money for a fee of a few dollars.
  2. Withdraw the money for FREE using their foreign ATM exchange rate.

We’ve had ATMs make us this offer all over the world on six different continents.

Which would you choose?!

Nothing is for ‘free,’ so what’s the smart traveler thing to do?


Pay the fixed fee. Otherwise you will be accepting a terrible exchange rate that will cost you much more than the flat fee!

Wondering what that means and how much it will cost you? Read on!

‘No-Fee’ Foreign ATM Exchange Rates are a Total Scam!

The idea that no-fee foreign ATM exchange rates will save you money is just wrong.

In fact, they will cost you a LOT more than the simple ATM withdrawal fee!

This is because you are trading a small simple fee of a few bucks for the ability of the ATM owner to give you a terrible exchange rate from your home currency to the local cash.

Often a percentage point less than the market exchange rate – or more! And the bank pockets that difference which could amount to $20, $30 or even $50 on your withdrawal.

So instead of paying a $5 fee, you are paying a $50 hidden cost!!!

An Example of a ‘No-Fee’ Foreign ATM Exchange Scam

Here’s an example of the no-fee foreign ATM exchange rate scam in action.

We recently withdrew 2000 Croatian Kuna from our US bank account from an ATM after our walking tour of Split Croatia.

We took a look at the ‘no-fee’ foreign ATM exchange option:

'No-Fee' Foreign ATM Exchange

There is no ‘ATM fee’. But the exchange rate offered is 5.8798 Croatian Kuna per US dollar.

Total charge to our home bank account would be $340.15 US for this ‘no fee’ ATM withdrawal.

Simple, right?

Yeah, a simple rip-off!!



Take a look at this:

No-Fee Foreign ATM Exchange

As you can see, the rate on the open market on that day was 6.4115 Croatian Kuna per dollar!

That’s a difference of 0.5317%!!!! That may not seem like a big number, but it adds up quickly!

Now – and this is what scares people – when we hit the DECLINE CONVERSION button the next screen gave us a fee of 25 Kuna – which is $3.90.

Take a look at what we actually paid to get 2,000 Croatian Kuna:

'No-Fee' Foreign ATM Exchange

We paid $313.56 for 2000 Croatian Kuna. And yes, we also paid a fee of 25 Kuna, or $3.90, so a total of $317.46.

Using the ‘No-Fee’ foreign ATM exchange option we would have paid $340.15 for the same 2000 Croatian Kuna.

Using the ATM’s ‘Conversion to Home Currency’ option was fee-free, but this ‘no-fee’ foreign ATM exchange option would have cost us $22.69 more for the same 2000 Croatian Kuna!!!!

So the HONEST way to describe the ATM fee options would be:

  1. Withdraw the money for a fee of a few dollars.
  2. Withdraw the money for at the cost of 0.5317% of your withdrawals.

We ended up paying $22.69 LESS by paying the 25 Kuna fee rather than accepting the ATM conversion! For the same 2000 Croatian Kuna.

See how quickly that 0.5317% adds up. You would NEVER agree to a $22.69 upfront ATM withdrawal fee. But by accepting the conversion that’s what you would pay!

By the way, this advice also applies any time you pay by credit or debit card in a foreign country!

If you are offered the option to either pay by credit or debit card in your home currency or the local currency PAY IN THE LOCAL CURRENCY!

Otherwise you will get an exchange rate far worse than what your credit card or debit card issuer will give you.

Conclusion – ‘No-Fee’ Foreign ATM Exchange Rates are a Scam!

The next time you are standing in front of a foreign ATM and are presented with the option of paying a $2 or even $5 fee or using a ‘no-fee’ ATM exchange rate, decline the conversion and choose the flat fee!

And if you are from the US and travel a lot then definitely open a Charles Schwab checking account. They will reimburse you for any ATM fees you incur.

But remember – not even Charles Schwab reimburses you for being fooled into choosing a terrible ‘no-fee’ ATM exchange rate!

Be a smart traveler!

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