If you need a bank account before you jump on the nearest space capsule, it’s worth taking a look Charles Schwab. And just ‘cause we like to pit banks against each other in a fight to the death, we choose Bank of America as our sacrificial lamb – just so you can see the key differences.
I’ll cover the most basic areas that any traveler is the most concerned about, and how each bank stacks up to one another: ATM fees, foreign transaction fees and even international wire transfers. As a bonus, I’ll even endure two customer service sessions to tell you how each bank stacks up in other departments like general assistance and depositing money.
We’ll basically be comparing Schwab’s High Yield Investor Checking account to Bank of America’s most standard checking account, the MyAccess Checking. Onwards!
On Depositing Money
You can go into a physical Bank of America and deposit all your pennies into your banking account. That’s not possible with Schwab. Instead, you either have to mail in your check (they have prepaid envelopes you can use) or deposit it via iPhone or Android app. It doesn’t really matter when you’re on the road or rely purely on online banking, though, but I guess when you’re back home, yeah, this stuff can matter.
Winner: Bank of America has a small edge.
On ATM Fees
Bank of America has probably the largest network of ATM machines when it comes to a physical presence in the U. S. of A. In fact, they’ve got something like 18,000 ATMs in addition to 6,233 domestic branch locations in 36 states. Don’t quote me on that. That’s way more than Wells Fargo, Chase and all of those other guys have. On top of that, they have a relationship with other foreign banks worldwide for fee-free withdrawals. Not bad, actually. But if you withdraw anywhere not in their network, you’ll get slapped with a $5 fee. (UPDATE: There is an additional 1% foreign transaction fee on all withdrawals regardless whether it’s in an alliance; starting November 8, 2013, this will go up to 3%.)
Schwab’s High Yield Investor Checking account, on the other hand, lets you withdraw from any ATM in the world for free. That’s because there are no physical brick and mortar Schwab banks, and they have no choice. That’s right: in Nambia, Thailand, England and even any bank in Boulder, Colorado. It’s all basically rebated at the end of the month. That trumps Bank of America’s 18,000 ATMS with basically a gazillion. I basically keep all my ATM receipts and make sure they tally up at the end of the month. Never had a problem.
Winner: Schwab, but I still suggest having at least two ways to access your money.
On Foreign Transaction Fees
A foreign transaction fee is often a hidden fee when you’re dealing with other currencies in other shape or form (cash withdrawal, wire, debit, transfer) on top of any other fees. The industry standard rate is 3%, which is pretty much Bank of America’s rate. This applies even when you’re withdrawing from a bank alliance. Schwab’s rate is… well, there is no fee.
Winner: This one is pretty clear, I think.
On Customer Service
When I dial the Bank of America number, it takes me about five menus and attempts to robotically speak in the phone before I can speak to a live human being. (Most of that is me wildly pressing “0” and saying “customer service,” “customer representative” and similar variations over and over again.) I’m going to admit, most of the time, they’re pretty helpful even if they sound really tired and I have to politely explain my complicated problem at 3 a.m. EST and that I’m 10,000 miles and 12 hours away.
With Schwab, it takes about one menu to get to a customer representative who always sounds remarkably smart and alert, even if they’re seriously burning the midnight oil. (Schwab also lets you listen to stock news while you’re on hold, instead of being subjected to Carly Rae Jepsen.) However, instead of feeling like I have to walk the rep on international issues, they seem really aware of how it all works. Recently, I had a problem with an international wire transfer (a company had neglected to send my account information). Schwab promised to call me back when 8 a.m. EST rolled around. They never did, but the money was in my account the next morning.
Winner: Both eventually deliver, but Schwab wins by a small margin thanks to quicker access to a live representative.
On Wiring Money Internationally
Wiring money internationally is going to affect expats more than travellers, but hey, you might never know when you might need to do it. In fact, I always got a kick out of it when I moved abroad and finally could say I had an offshore account. Not only is reality pretty boring (pirates wouldn’t even want my small fortune), the fact is, I mainly make my money in Hong Kong dollars. I was eventually forced to sign up for a Hong Kong bank account. Unfortunately, I’ve still got bills, student loans and a ton of zippy doodads like a pack of cards I just bought using Amazon Prime that I have to pay back home in US dollars.
Enter wiring money. The Hong Kong dollar is pegged to the U.S. dollar at a fixed rate (it never fluctuates), so it’s pretty easy to gauge how much a bank is gouging me. For the sake of simplicity, all wires sent to me were from someone else who paid the outbound fee. That means I only had to worry about the conversion rate from Hong Kong dollars and the inbound fee.
Stupidly, I used Bank of America the first time around. The bank charges $12 for incoming wire transfers, as well as the conversion fee. I wired $7,000 HKD, or basically what is the equivalent of $902.74. What basically showed up in my account was $875 after conversion fees, but it then was knocked down by the $12, meaning I only got about $863 in the end. This means Bank of America made about $39.74, taking a very healthy 4.4% spread from me. That’s actually a lot.
To test the waters, I went to Schwab for my next transfer. And I finally understood why I had a brokerage account with them for all of these years – the checking account requires you to link it to a Schwab brokerage account to keep it free. But the checking actually can’t receive wires, only the brokerage account can. Schwab charges no fees for transfers – only the going conversion rate. Once you receive it in your brokerage account, you can transfer it to your checking with absolutely no problem. (You do have to send it to Schwab’s intermediary bank along with your account info, who may or may not charge fees.)
I decided to wire about $16,800 HKD ($2,166.59), over double the original amount I sent to Bank of America, this time around. What showed up in my brokerage account was $2,164.11. Which means Schwab made only $2.49, or basically a spread of only 0.2%. That’s pretty damn good.
In the end, does it seem silly opening up a new bank account just for your globetrotting ways? Well, not really – especially if you’re considering doing a lot of it. You’ll save a lot of money, just by having a good bank. The thing with Schwab is that they’re pretty great in other ways too, so much I’ve considered making them my brick and mortar. Though they don’t have to step up to the plate that much to beat Bank of America, the checking account is almost virtually a home run in every way.