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What’s the Best Bank Account for Traveling?

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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.

Winner: Schwab.

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.

  • Candy

    I always suspected that BOA would charge for everything. But I was surprised that Schwab had such small fees. I thought they only worked for people who had money to invest. I am enlightened!

    • Erica Ho

      I wouldn’t be surprised if BoA was the worst offender! (Someone prove me wrong, please.)

  • chad

    Thanks for this post, I didn’t know all that about Schwab accounts. Very helpful.

    • Erica Ho

      Cheers. They’re probably the most versatile in my opinion.

  • Joseph Campbell

    Great piece, very informative and super relevant to my situation. I had been leaning toward starting a new Schwab account and you just sold me. For the record, I am an American living abroad and both wire transfers and ATM use at random locations are extremely pertinent to my banking decision making….thanks!

    • http://maphappy.org/ Erica Ho

      Glad you found it useful!

  • Jason

    Great piece of information, and relevant to my situation. I’m getting ready to get rid of my BOA account for these exact same issues. I’m currently trying to decide between opening up either a Schwab or Fidelity account for my primary checking account purposes. Fidelity also has a no fee ATM reimbursement program, but does charge an 1% foreign transaction charge for each use. Which would add up with steady use. I travel quite a bit, and am looking at moving abroad in the near future….. and BOA is just not going to cut it with these fees.

    • http://maphappy.org/ Erica Ho

      The bright side is that BofA has certain reciprocal agreements with certain countries. Generally, they suck fee-wise, but I just feel safer having a ‘backup’ option.

  • CF

    Might want to also add an Editor’s Note about BoA’s upcoming ATM fee increases for international withdrawals starting at the beginning of November. For all China-based readers, BoA has also gotten rid of the free wires between BoA and CCB, and I’m sure the ATM fee agreement will also cease in the near future now that BoA has sold off all of its CCB shares last month. I’ll definitely be switching to Schwab when I’m back in the States for Christmas!

    • http://maphappy.org/ Erica Ho

      Thanks CF! Wasn’t aware that BofA was increasing its fees.

  • Guest

    FYI: Open the account BEFORE you leave the U.S.
    Initiating a new account online from a foreign i.p. will trigger an impossible verification process that can only be resolved by an in person visit to a Schwab branch. The otherwise happy-as-pie Schwab reps become zombies spouting Patriot Act regulations for THEIR rule.
    Not helpful, and actually punitive attitudes when trying to have my initial deposit returned to me? What? that’s right. They happily accept my deposit, help me set up the “easy transfer” process, ping my U.S. bank account for two practice transactions, then say, send us your money.
    It is only AFTER this, that they say, “WHOA buddy.” All of a sudden the phone rep access is DIFFICULT. To close the account and initiate a refund, the manager put me on hold over 20 minutes before I had to give up.
    So, Schwabbies, if you are lurking about, why not put this safeguard up-front in the initiation process? It’s easy. Block the foreign i.p. addresses. Politely tell us unsuspecting potential customers that we must be in the U.S. to use this process.
    Really, it is quite a jump to assume that we have nepharious intentions because we are abroad trying to open an account.
    Now, I am actually concerned, based on the snotty attitudes in the client verification department, that they are going to report me to the homeland security as being involved in suspicious behavior. Indeed, SO SUSPICIOUS– trying to open an account.
    I got that control-obsessed flight attendant attitude coming across.
    I don’t blame everything on the Schwab folks. But, they are participants in this post 9/11 environment where U.S. citizens are being restricted more and more in their liberties. It is just sad to watch the country coming apart piece by piece.
    Obviously, remote desktop in, use GoToMyPC or similar if you are already abroad. I don’t know if this would prevent this problem 100%, but I am kicking myself for not having done this from the beginning.
    BTW, your review wasn’t bad at all. I may never know the benefits of Schwab anything, but I was certainly interested. You may want to update your report with this info. Cheers

    • http://maphappy.org/ Erica Ho

      Uh, yes. You might want to open the account *before* you leave. I personally would never do it from abroad. Not sure why you did.

  • Jason K.

    One caveat is that Schwab can only accept certain currencies to be directly transferred into brokerage account without having to be converted (locally, at whatever applicable local rate) into USD first. This includes most of the major powers, GBP, EUR, HKD, JPY, et al. You can see a full list here. Schwab has a tieup with Citibank and a few other banks in those individual countries/regions to allow them to send a domestic wire and have it enter their US Schwab account. Anyone dealing outside of those currencies needs to send it as a USD international wire to Citibank in New York, noting Charles Schwab & Co., Inc as the Account Name, and the receiver’s name and account number in the ‘For Further Credit to’ field.

    Thankfully, USD exchange rates in the UAE are extremely competitive, rarely straying more than one or two hundreds of a dirham off the official exchange rate of 3.6725–the bank used in the UAE gave 3.674–a 0.04% difference–negligible vs the official rate ($2.03 on this transaction). A quick look at comparative exchange rates there show that the spreads on other currencies are larger–0.1 dirhams on CAD/GBP, et al..10x more than USD.

    The sending fee was 45 AED or $12.25 USD, so the total cost of sending this was about $30 USD, though it’s probably best to simplify comparisons by removing the sending fee from the equation, as you did.

    As you mentioned, intermediary banks can charge fees–in my case it was $18.00. Schwab has no record of it, as they only know the amount that came into the account, nothing else, and do not charge incoming wire fees themselves. The receipt from the bank account in UAE shows the amount I actually received+$18. I was aware that something disappearing in between was a potential issue, but ultimately it’s not worth the effort to track down, as neither the sending or receiving bank have any more information about the difference in sent and received amounts, and spending any time digging beyond that fails a cost/benefit analysis, as I already know the likely answer–whatever intermediary bank there is took a fee–I don’t believe it’s Citibank as you weren’t charged in your transaction, though perhaps if you used Citibank in HK that might be a plus).

    I did this transaction to help out a relative who is visiting the US. All his UAE credit cards and bank accounts charge huge foreign transaction fees for purchases/withdrawals (he’s looked for no forex cards or an account like Schwab there, but to no avail). I created a secondary bank account, and requested a second debit card just for this purpose. A single $1,000 ATM withdrawal from his UAE account costs the equivalent of $1,051 USD (3,861 AED), with all fees included. Just one withdrawal with Schwab more than pays for the $30 in total costs to wire his money over.

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