The convenience of ATM cards and Credit cards extends over the ocean in Europe as well thanks to a few global cash networks. These networks allow cards to be used in different countries just as you would used them at home in the US. You should have no problems using your American cards anywhere in Europe provided you check a few things before you leave. This article will outline these few things you need to know before you use your ATM and Credit Cards in Europe.
Understand modern cash networks
Each major credit card network (VISA and MasterCard) manages their own global cash networks. VISA’s network is called PLUS (also known as Visa PLUS ) while MasterCard manages two networks: Maestro and Cirrus.
These days all ATM (or debit) Cards are working as credit cards as well, either VISA or MasterCard. Most likely you will see the VISA or MasterCard symbols on the front of your ATM card (or debit card).
In addition, your ATM/Debit card will have a few more symbols on the back side. These symbols represent the cash networks your card works on. If you don’t see any of these symbols on the back of your ATM/Debit card then your bank is probably very small and is not using any of the major card networks. You can also check the back of your VISA or MasterCard credit cards and you will also notice one or more of these symbols. Sometimes you can see a Cirrus logo on a VISA credit card. I’m not really sure why but the cash networks are separate from the Credit Card networks, so you can see some odd combination.
The important thing is to know what symbols are on the back of your ATM and Credit Card that you’re planning to take with you. You will need to know these symbols when you want to get cash in Europe. Not all ATM machines in Europe support all cash networks. You might see some debit cards bearing the PLUS sign but not the Cirrus and vice versa. It doesn’t really matter.
The important thing for you to remember is that you must know the symbols on the back (not the front) of your ATM/Debit card. If you can match these symbols with the symbols on an ATM machine in a foreign country, then you can make sure you are getting cash the safest and cheapest way.
Simple checklist for using your debit and credit cards in Europe
- RULE 1: Make sure you call your bank before leaving on your international trip. This one rule will save you a lot of headache. It is the most important rule! If you don’t inform your bank or your credit card company, most likely your card will be rejected when you try to purchase things abroad. This is the only way financial companies can protect you against fraud…so help them out.
- RULE 2: Make sure your pin number for your ATM card has 4 digits. In Europe pin numbers have a max of 4 digits allowed. In the US most banks allow for 5 digits as well. So, before you travel abroad, make sure you go to the local branch and change your pin to 4 digits…and also make sure you test it before you go.
- RULE 3: NEVER withdraw cash using a credit card! This is valid in the US as well, but even more so abroad. You will pay dearly!
- RULE 4: Withdraw cash only by using your ATM card from an ATM machine bearing one of the symbols on the back of your card. The symbols on the front (VISA or MasterCard) are important only for purchases. Many ATM machines show the sign VISA or MasterCard only and none of the cash networks signs. If you don’t see one of the signs on the back of your card, then look for another ATM machine.
- RULE 5: If you’re taking a credit card with you, call your bank and ask them how much they charge you on international purchases. Regardless if it’s a VISA or MasterCard, each bank that issues a credit card has its own fee and they should be able to tell you. Remember that it’s your bank’s fees PLUS the VISA (or MasterCard) fees on top.
- RULE 6: Know what your daily maximum for cash withdrawal is. Depending on the fees charged by your bank, many times it makes a lot of sense to withdraw the maximum allowed in one transaction. Many banks charge a flat fee for each transaction regardless of the amount.
- RULE 7: While abroad, withdraw cash only from a local bank ATM machine and not from shopping malls or train stations. These ATM machines most likely will charge you extra money.
- RULE 8: Make sure you always have some cash with you. Even if you have a good credit card, many places in Europe can only accept credit cards that have a chip in them (cards issued in Europe). The American Credit cards don’t have chips and they will not work in some places in Europe.
Should I use my ATM/Debit or Credit Card in Europe?
Should you use your ATM or Credit Card in Europe or both? The answer is a bit more complicated but I’ll try answering this question from a pure financial perspective.
You might have a preference for one card over another but for me it really comes down to the fees I pay for every international transaction.
Know your daily cash withdrawal limit
Each American bank has a different daily limit on cash withdrawal limit. US banks vary a lot in their limits and with some banks you can even ask for an increase in the daily limit for a given period of time. You just have to check with your bank.
Wells Fargo for example, allows $500 maximum daily (which can be increased by a simple phone call), so you would have to do a mental conversion before entering the sum you want to withdraw in the foreign ATM machine. I have not encountered any ATM
machine in Europe that would limit the amount you can withdraw (unless they are running out of cash).
This limitation to the daily cash withdrawal limit was imposed by my bank here at home in the US. So, if you want to be able to increase your daily limit for cash withdrawal you have to call your bank and request it. They will usually increase it without any further questions. It’s your money anyway!
Know your ATM/Debit cash withdrawal fees
A combination of a Flat Rate and/or a percentage of total. Again, it really depends on your bank. You’ve got to ask them so you will not be surprised.
For example: Wells Fargo will assess a $5 fee for ATM cash withdrawals made outside the United States and an International Purchase Transaction fee which is 3% of the transaction amount for each purchase made with your debit card in a foreign currency that has been converted into a U.S. dollar amount by a network.
Washington Mutual (now Chase) charges 1% of the amount withdrawn. So, you have to know what your bank will charge you. There are no extra fees associated with ATM machines in foreign countries…at least in general.
However, just like home the US where you get charged extra by getting cash from ATM machines in shopping malls and some grocery stores, in Europe also you have to be careful where you get your cash from.
The safest place to withdraw money in Europe, in terms of not being charged extra, is an ATM machine of a local bank.
Know the fees for your ATM/Credit card international purchases
VISA or MasterCard charge 1% for converting to US dollars plus a percentage of the purchase total after converting to US dollars. Again, call your bank so you won’t be surprised. And for fun, just ask them why they charge you on top of what VISA/MasterCard charges you. It’s always great to see how banks try to explain that they’re just trying to take advantage of the increase in international travel and make lots of money.
American Express foreign currency conversion fees
If you look at the back side of the first page of your American Express statement you will see a somewhat clear statement with regards to transactions made in foreign currency. Transactions Made in Foreign Currencies. If you incur a charge in a foreign currency, it will be converted into US dollars on the date it is processed by us or our agents. Unless a particular rate is required by applicable law, we will choose a conversion rate that is acceptable to us for that date. Currently, the conversion rate we use for a Charge in a foreign currency is no greater than (a) the highest official conversion rate published by a government agency, or (b) the highest interbank conversion rate identified by us from customary banking sources, on the conversion date or the prior business day, in each instance increased by 2%. This conversion rate may the rates such establishments use.
What does this mean? Well let’s just take a simple example. Let’s say you purchase something in France that is 100 euros. American Express, when they receive the transaction, converts the price from Euros to U.S. Dollars using the highest conversion rate they can find (at least that’s what they’re saying…it’s hard to really check). Let’s say that they find 1.5 US Dollars to 1 Euro. That means that they will charge you $150 U.S. Dollars for the item you have purchased. Now, the finance charge is 2%, which means that that they would add an extra $3 (2% from $150). So, your total for that item would be $153 US Dollars.
US Bank Visa fees for purchases made in foreign currency
Here’s an example of what US Bank says about foreign transactions on my VISA credit card statement: As a reminder, we may charge a foreign fee of 3% on transactions that occur in a country other than the U.S. Now, this is interesting. As if they will ever NOT charge me 3% on transactions that occur in another country
. Remember that this is 3% on top of the 1% fee that VISA charges for conversion. That’s a minimum of 4%. Using the example I have used for American Express, the same 100 Euro item would cost me $156 if I would use my US Bank Visa.
What’s the best credit card to use for foreign transactions?
Not only that Capital One doesn’t charge ANY foreign transaction fees but it also swallows all the fees Master Card charges for any foreign transactions. To put it simply, you don’t pay anything extra for using the card outside of the United States. In addition you also get 1% cash back on all purchases. This is unbelievable!
Second in line would be the American Express cards. American Express credit cards are the second best choice for making purchases abroad. The reason is simple: there is no VISA organization on top of them to charge something else on top of what they for foreign currency exchange. In the example above, the difference between American Express and a US Bank VISA credit card is 1% but US Bank will also charge another 1% because it’s a VISA credit card. So the difference is 2% between the two cards. So, on a $1000 purchase made abroad you would be saving $20 by using American Express instead of US Bank Visa card.
How should you use your ATM and Credit card on an international trip?
When travelling internationally I try to simplify everything. So, when it comes to the debit and credit cards I take with me I have only one simple rule.
I use my ATM/Debit card for all cash withdrawals and I use only my Capital One credit card for purchases where credit cards are accepted. And remember that the symbols on the front of your ATM card are for purchases while the symbols on the back are for cash withdrawals.
Tourist resources for using your debit and credit cards in Europe