Monday, February 4, 2013

Wire transfers and ATMs

Transferring money to a stranger's bank account can be a pain. Especially in another country. Even more so in another currency. Wire transfers are the standard way to do this, but:

  • Some U.S. banks won't do outgoing wire transfers at all. One of our checking accounts is in this category.
  • Outgoing domestic wires within the U.S. typically cost $15 each.
  • Many U.S. banks won't do outgoing international wire transfers at all. Two other banks we've used are in this category.
  • Outgoing foreign wires denominated in U.S. dollars typically cost $32 each.
  • Most U.S. banks won't do outgoing international wire transfers denominated in a foreign currency. Only one bank we use will do this.
  • Outgoing foreign wires denominated in a foreign currency cost us $47 each.
  • In the U.S., most banks accept incoming domestic wires and none that we've used charge a fee for that. Thank you!
  • But some banks we've worked with won't allow an incoming foreign wire at all.
  • Banks outside the U.S. seem to commonly charge fees for incoming wires. These fees can be extremely high for USD-denominated wires, including poor exchange rates and additional fees. But even in our recent experience wiring money in Euros to two different German banks, they've each assessed a €10 fee from the recipient's money.
  • Czech banks charge fees for just about everything, and their fees for incoming wires seem exorbitant enough that it's not worth doing at all, especially after already paying the sender's fees on our side.
  • The recipient will give you a bunch of details: recipient name and address, IBAN (International Bank Account Number), bank name, SWIFT number, maybe other details. But often your sending bank will want more details that you don't have: branch name, branch mailing address and phone number, sometimes a national banking system number of some kind. You either have to track down the recipient to ask about this, which they may not even know, or sleuth it out on the Web.
  • Some sending banks allow you to make a wire transfer request on their online banking site, while others require you to do it by phone or in person at a branch. Many will do a follow-up verification to a phone number on file, at a time not of your choosing.

In short, be prepared for unexpected complications, more round-trips of email and phone calls, and delays.

Sometimes there's no way around needing to wire money and pay the fees anyway. You can try using alternative quasi-banking services such as PayPal instead, but there are fees there too, and other problems, if the recipient will even use that service.

Using ATMs to withdraw cash can be the cheapest way to exchange money from your home bank's currency into a foreign currency. It's common for banks to charge a 2% international transaction fee on any ATM withdrawal, cash advance, or international credit card charge. But you can carefully select a bank and ATM card with no Foreign Transaction Fee (FTF), leaving only the VISA/MasterCard transaction fee of up to 1%. That's a lot cheaper than exchanging cash at a bank, or worse, one of those tourist-trap currency exchange services that are legendary for charging a lot and having unfair exchange rates as well.

Of course there is the daily ATM withdrawal limit to consider, which ranges from $300 to $1000 or so depending on the bank, and may apply to each ATM card separately or to the account as a whole. Individual ATMs may also have their own transaction amount limit that is lower than your bank's daily limit.

This credit card survey shows many cards that waive the foreign transaction fee. Capital One is well-known for not charging a foreign transaction fee, and since its acquisition of ING Direct bank, ING cards no longer charge a FTF either.

2 comments:

  1. It really sucks. Way better inside the EU though, just a small fee and wires are always fast. US banking system is not customer friendly AFAICT.

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