If you vacation outside the country this summer, you might come home to find your checking account smaller than expected.
Who raided it?
It might have been your bank.
The fees charged by banks as well as other financial institutions to use foreign automated teller machines can deplete cash faster than lunch in London. Some U.S. banks charge as much as $5, plus a percentage, every time a debit card they issued is used at a foreign ATM.
Not that you would know it at the time. Unlike in the U.S., where you receive an on-screen warning if additional fees are to be collected for a machine withdrawal, these charges can be invisible until you receive your bank statement back home.
Even highly seasoned travelers can be caught off guard.
"I used to always use my ATM [card] when I traveled because I thought it gave me the best exchange rate," said Harlan Levinson, a Los Angeles accountant who frequently travels outside the country.
During an October trip to Vietnam, he used his debit card. When he arrived home, he noticed for the first time a 2.8 percent charge on every ATM withdrawal.
"I was surprised," he said. "It's not much money. Even if you take out $2,000, it's only about $60.
"But even if it's only $10 a pop for everyone traveling, if the bank gets it 100,000 times, that's good money for them."
Levinson has since received a debit card from a bank that has better terms, but he's resigned to paying a fee for each withdrawal.
"Every way that the banks can charge more money," he said, "they do it."
Gail Hillebrand, of the nonprofit Consumers Union, publisher of Consumer Reports magazine, said that foreign ATM fees had crept up on consumers over the past few years.
"We used to tell people that it was a good idea to get cash from an ATM and use it for purchases instead of a credit card," she said.
This was to avoid the fees that credit-card companies were assessing for foreign purchases. In most cases, using a U.S.-issued Visa or MasterCard costs an extra 3 percent outside of the country.
But then the debit cards "started adding the fees too," Hillebrand said. The fees are especially troublesome because the debit card has become an almost irreplaceable standard for travelers.
"People are trying to reduce the amount of cash they carry around to reduce the theft risk," she said. "We have all been induced to use plastic.
"But now we're getting hit for using the plastic in the way it was designed to be used."
Although many banks surveyed sing the praises of their debit-card programs on their Web sites, they rarely included the amounts of the foreign withdrawal fee charges.
Banks say details of the fees are distributed to customers, and some say the fees are necessary because international transactions have higher processing costs and greater risk for the banks.
At least the charges are broken out on the statements. That's how Levinson found out he had been assessed the fees.
In this way, the debit-card issuers avoid the class action suits alleging that credit card companies and banks rolled the fees into currency-converted charges that showed up on bills.
In 2006, MasterCard, Visa and several banks agreed to pay customers $336 million in lawsuit settlements in which they did not admit to any wrongdoing.
Bank of America recently announced a new program to better explain its policies in regard to fees and other matters. A brochure, "Our Account Fees Explained," will be distributed online and in branches in the coming weeks.
Consumers Union wrote a letter in response, saying the bank should "reduce fees and eliminate fee-triggering practices, not just simplify its disclosures."
When it comes to foreign ATM fees, most people probably aren't in a good frame of mind to fight them, Hillebrand said.
"When you get back from vacation," she said, "that's when you're putting the kids back in school. You're getting back to work. It's not a good time to address a consumer issue."
David Colker writes for the Los Angeles Times.
While traveling outside the country, it's nearly impossible to avoid being hit with ATM withdrawal fees. But you can minimize the damage by:
Checking with your bank before traveling to find out exactly what fees are charged.Shopping around to obtain an account with a bank that offers a better deal. The fees vary greatly.
Asking your bank whether it has a relationship with banks in the countries you will be visiting. For example, Bank of America debit cardholders can use the ATMs at Barclays Bank in Britain without paying fees.
Limiting usage by always withdrawing as much cash as you feel comfortable carrying around with you if there is a flat fee for each ATM visit.
[Source: Los Angeles Times]