4 Ways To Avoid Bank & Credit Card Fees While Living Abroad
It’s been over a year since my partner and I decided to uproot our comfortable lives in Seattle, WA to pursue opportunities in Taiwan. In the States, I felt like I had my shit together financially, at least relatively speaking. I put some money into savings each month, and I tracked my spending religiously. It took me years to be smart with my money, and even then, I knew I had only scratched the surface. Moving to Taiwan felt like taking a big step backward. Being unemployed when I first arrived, I racked up thousands of dollars of debt. I was putting purchases on my credit card and not paying it off immediately. I was spending money on frivolous things I didn’t need because of the novelty of it coming from a different country. Worst of all, I wasn’t properly keeping track of what was happening with my bank accounts. I’d gone back in time, forced to learn hard lessons about managing money again.
There are so many mistakes I’ve made while living abroad. And I have a habit of dwelling on bad money decisions. I ruminate on all the ways I could’ve saved if only I did something a little differently. Ever heard of the “tyranny of the should“? The theory behind the tyranny is that we split ourselves between an ideal self and a real self. When we don’t achieve the perfectionism of our ideal self, our negative self-talk comes out in the form of reprimanding ourselves for all the “shoulds” we’re not accomplishing. “I should be better with money.” “I should already have retirement savings.” “I should not have bought this.” “should” all over myself in nickels and dimes. But there’s a meaningful lesson behind every mistake.
1. Beware of sneaky bank fees.
Before moving to Taiwan, I used my debit card for everything. I also had paychecks deposited into my bank account regularly. These frequent transactions helped me meet my bank’s minimum requirement for a “free” account. In Taiwan, I don’t swipe my debit card anymore, because I know it will subtly increase the price of everything I buy through foreign transaction fees. I also get paid in cash, so there are no direct deposits in my account.
Without realizing it, I was paying a $10 monthly maintenance fee for my checking account. The first time this happened, I figured I wasn’t meeting my account’s minimum required balance (I find it frustrating that banks charge people money for not having money, but I digress). Although the bank does have an international number, I don’t have international calling. This is the main reason for almost all of my financial stressors–the inability to directly communicate. My parents helped me contact the bank to something more sustainable: a free banking account with a $1,500 monthly minimum, instead of the $10,000 minimum it used to be. It’s only free when you meet the minimum bank requirements, otherwise, you pay $10 a month.
But when I saw another fee pop up on my account, I was puzzled. I had enough money in my checking account to keep the balance above the minimum. What was the problem now? After more financial sleuthing, I discovered that I had slipped below my account’s required minimum for two days. Yes, TWO DAYS. The dip happened when I made a student loan payment — I transferred more money from my savings account into my checking account two days after the payment, but the damage was done. Although I had more than enough money to cover my checking account’s minimum, it was sitting in my savings account instead, I got charged for the month.
This was, fortunately, an easy enough fix. I had my parents help me call the bank, again, and explained the circumstances of the charge. Which leads me to…
2. Don’t be afraid to ask, even if it is harder to do so.
Most banks knock us when we’re already down. It’s pretty ironic to pay $20 for not having enough money. However, banks are run by people, and they’re usually understanding about how frustrating this practice can be. It’s a hassle to get ahold of customer service internationally, but if you put in the effort and do it kindly, you may get reassuring results.
It doesn’t hurt to ask for them to reverse a fee, especially if you have a long history with the bank and can show that it’s something that doesn’t occur routinely. In my previous example, I had enough combined money in my accounts, it was just a matter of transferring the money over to the correct one. Don’t lose money procrastinating, and don’t avoid doing something because you think it won’t work. Even if the first person you talk to is a barrier to getting your needs met, the next person you ask to speak to may not be. Getting my money back was absolutely worth the time, and I thanked the person who reversed the charge over and over again for it.
Banks with international hotlines assume travelers, or people living abroad, have international minutes. Companies might have regular 9-5 business hours that are difficult to get ahold of if you’re on the opposite side of the world. When I need to contact a company abroad I have a very small window available that the US office is open, and my parents are available to help me call. I’ve talked to many people living abroad who struggle with account issues, including banking. Due to the added effort, it takes to contact a company while in another country, I’ve noticed a lot of people will push the issue aside and tell themselves they’ll deal with it later. In the end, months will go by, and more problems will arise. The anxiety of not having already done something about the issues builds up, causing avoidance. Don’t get trapped in that vicious cycle. Find a way to make it happen.
3. Have a solid travel credit card.
Having cash on hand is necessary in Taiwan, especially if you’re living or traveling on a budget. Although you can use credit cards at larger stores and major brands, the majority of local businesses are cash-only. When you do use a credit card, however, there’s a major downside: foreign transaction fees.
When we first moved, my partner was his debit card for purchases as a way to preserve the cash we had on hand. While tracking our finances, I realized we were steadily losing money to foreign transaction fees. Of course, I was frustrated. We weren’t bringing in much of an income at the time, so we really couldn’t afford to throw money away on fees. I hunkered down and spent a couple of hours making spreadsheets to look at our expenditures and our income and get a better feel for our financial health. After we sat down and talked about it, we agreed to avoid credit or debit cards for anything other than U.S.-based internet purchases.
However, we soon discovered that my travel credit card (I use the Capital One Venture Card) doesn’t charge foreign transaction fees. I can confidently expect the same amount of money I see on a purchase to be charged to my card as well as a precise currency exchange rate with each purchase. Now we have a credit card we can use without being charged a fee. If you are planning to travel abroad, go to your bank and make sure you have a way to access your money without it getting siphoned away.
4. Beware of dynamic currency conversion fees.
Knowing that my Capital One card was protecting me from foreign transaction fees, I felt immune to fees. That is, until a few months ago, when I learned about Dynamic Currency Conversion (DCC). To help understand how DCC works, let me give you a real-life scenario.
I was shopping at a mall in Taoyuan City to buy my partner a new pair of shoes. He’s a very function-before-form person who wears everything until it’s worn out, so I bought him a pair of maroon Crocs. (Don’t judge — these aren’t the weird shoes that look like giant rubber slippers, but the newer kind that look like sneakers.) I paid for them with my travel credit card. The transaction screen displayed two options: I could pay in NTD, Taiwan’s currency, or USD, my home currency. Without thinking about it, I selected USD. It was familiar and easier to understand.
However, when you choose to process the purchase in a foreign currency, you pay for the “convenience” of seeing the price in another currency. The company charges you to convert the purchase when your travel credit card would have done it free of charge. This is DCC, and this “convenience” fee can cost you up to 7% more than your purchase.
It can be exhausting to go through our finances with a fine-toothed comb, but it’s vindicating when I can figure out what went wrong. And so much can go wrong when you’re used to managing your finances in one country finances in one country versus another. Yes, living abroad and managing money is challenging. As long as you are kind to yourself while getting into a new routine with your money, and you take action right away when there is a problem, you’ll figure it out.
Meagan is a 28-year-old Latin American woman currently living abroad in Taiwan.
Image via Unsplash