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ATM 'Conversion Fees'

Wells Fargo bank - foreign-currency ATM conversion fee

ABOVE: Wells Fargo slipped this bombshell into a statement insert a few years ago, when the trend toward "conversion fees" began.

Most experienced travelers will tell you that ATMs are the cheapest way to get cash overseas. For that matter, so does Visa, which handles currency conversion for banks around the world. Here's a statement from the Visa Global ATM Network Web page:

"Withdrawing cash at Visa/PLUS ATMs using a secured PIN can save you money and makes it easy to take advantage of the favorable exchange rates offered by ATMs. Cash withdrawals are dispensed in local currency, and are debited from your account in your own currency - this eliminates additional currency conversion fees and commissions often assessed by traditional currency exchange bureaus."

Well, think again. Most banks tack an additional "conversion fee" onto the Visa or MasterCard currency-exchange commission. Not only that, but this hidden surcharge is on top of the flat "ATM-use" or transaction fees that banks often charge for ATM withdrawals away from home.

Example: Wells Fargo, one of the largest banks in the U.S., charges a conversion fee "for each purchase transaction in a foreign currency using any type of ATM & Check Card." The charge, which was recently raised from 2% to 3%, is in addition to the standard 1% currency-exchange commission levied by the Visa/MasterCard international clearinghouse.

Let's do the math: For a withdrawal of US $100 in a foreign currency, a Wells Fargo customer is paying a $1 currency-exchange commission to the international clearinghouse, an additional $3 Wells Fargo conversion fee or surcharge, plus a flat $5 ATM transaction fee. Total cost: $9, which is equal to an eye-popping 8% exchange commission.

Such fees aren't limited to banks in the U.S. Many British banks now have "currency conversion fees," and the epidemic has spread to other countries. In June, 2007, an Australian reader reported:

"My daughter is visiting Europe using a cashpassport card and ATMs displaying the Visa sign. The cost of euros in Australian dollars was as expected in the UK, higher in Paris and Germany, but from Prague she reported 300 Euros cost up to AUD523. This must be about 9% on top of the flat transaction fee of $3.75."

How can you avoid being gouged by high ATM surcharges?

  • One way is to switch banks. You'll nearly always pay the 1% wholesale exchange commission (which is only reasonable), but you can avoid bank surcharges if you shop around or--in some cases--if you're a big-balance customer at a bank that normally charges conversion fees.

  • You can avoid the flat ATM-use fees (such as Wells Fargo's $5 overseas transaction fee) by getting your card from a Global ATM Alliance bank and using member banks' ATMs abroad. The alliance has nine member banks in eight countries, including Bank of America in the U.S., Barclays in the UK, and Deutsche Bank in Germany. Also, the Wall Street Journal reports that HSBC and Citibank have 18,000 ATMs each in more than 40 countries, and U.S. customers of those banks don't pay an ATM-use fee at foreign locations.

  • You can also minimize ATM fees by charging most purchases with a Visa or MasterCard. But watch out--some banks and other card issuers have credit-card surcharges of up to 5%.

  • Finally, be aware that some local banks or private ATM owners may tack on their own fees. You'll minimize the risk of such charges by using ATMs at major banks and post offices.

Bottom line:

As banks lose income from traveler's checks, they're looking for new ways to extract money from overseas travelers. Check your bank's policy on conversion and transaction fees before you use an ATM card abroad--and if you feel that your bank's fees are unreasonable, look for a less greedy bank.

Another conversion scam: Merchant fees

Kelly K. Spors of The Wall Street Journal reports that some hotels, stores, and other merchants are now charging foreign customers in their home currencies. For example, an American visiting London might receive a hotel bill in U.S. dollars instead of pounds sterling.

This "convenience" comes at a price, since the merchant is typically padding the bill with a 2% to 5% commission on the currency exchange.

To avoid such fees, tell the merchant that you want to be billed in local currency, and refuse to sign a charge slip in your own currency. (According to the Journal, Visa requires merchants to let customers opt out of conversion, and American Express waives its 2% conversion fee if the merchant has performed the conversion.)

Money tools and tips at
Europe on a budget (money-saving tips)
Currency converter
The euro
ATMs and exchange machines
ATM conversion fees
Using credit cards in Europe
Credit-card surcharges
Prepaid Travel Money Cards (debit cards)
Traveler's checks
Tax-free shopping (VAT refunds)
Travel-insurance articles

About the author:

Durant Imboden photo.Durant Imboden is a professional travel writer, book author, and editor who focuses on European cities and transportation.

After 4-1/2 years of covering European travel topics for, Durant and Cheryl Imboden co-founded Europe for Visitors in 2001. The site has earned "Best of the Web" honors from Forbes and The Washington Post.

For more information, see About Europe for Visitors, press clippings, and reader testimonials.