For a US citizen traveling worldwide, what is the best major debit/ATM card (on the Visa or MasterCard networks) to take in terms of lowest fees for withdrawing international currency from ATMs? Withdrawing from foreign ATMs often results in a series of bank fees, currency conversion fees, and ATM fees, and I'm looking for the card with the best policies on these fees to save money during international travel.
I've been living in Europe now for about 5 years but still make the bulk of my income from the US (where I'm from). I have tried many US banks and all the debit cards you can imagine. Most promises of low transaction fees and hassle-free transactions are lies.
Here's what I've learned.
Bank of America (BofA)
I used BofA for all my ATM transactions for 2 years. They have an arrangement with the 8 biggest banks in the world (Global ATM Alliance) Barclays (UK), BNP (France), Deutsche Bank (Germany), etc.
If you use any one of their alliance ATMs they will in theory not charge an ATM fee. However, this is not always true. Some alliance members have ATMs in external zones, for example Deustche Bank has ATMs outside of Germany in both Poland and Czech Republic, etc. They will not charge you in Germany but you may face charges at these external ATMs. Loopholes not withstanding, finding these specific ATMs can be an adventure, one that more often than not ends in tears. BofA also charges high exchange rate fees.
They used to have free transaction fees for foreign purchases (one of the few) but no longer, they now charge 1% which is still low, I believe the average is 2-3%. Never assume your card has low transactions or believe a word you read until you try it.
Looked great on paper, but wasn't. Do not use Citibank for travel outside the US. I tried using them thinking that, because Citibank has branches all over europe, it would be a good way to transfer money and use ATMs locally but it was not. It was worse then BofA, much much worse. AVOID.
This is the card I've been using for the last 3 years and it is awesome. I've never thought it possible to like a bank, but this one has never misled me, yet. Other cards may advertise ATM reimbursement, this one actually does it. The others either have limits, say limit 2 per month, schemes requiring you to pull over a certain amount, have $25,000 at all times, or some other ridiculous crap hidden in fine print that the accountants at Arthur Anderson would have admired.
This card has no weird restrictions, you simply use it. I didn't believe it when I signed up, but have had a perfect experience for 3 years. On the off chance they miss an ATM fee (it happens 1% of the time), you send them an email, they remove it.
Too good to be true? You would think so. Too good to last? Probably.
I currently use the Charles Schwab High Yield Checking card, which reimburses all ATM fees charged by other banks (even internationally). It's a little bit of a hassle to set up as it requires you to have a linked (but free) brokerage account with them as well. And it's just ATM fees, foreign transaction or currency conversion fees still apply, as far as I know.
The conditions for the Charles Schwab card remain almost as good as indicated in @holden's answer from 2011. There are still no fees, and still total reimbursement of ATM fees. However, the fine print says that the conversion rate will be between 0.10% and 1.0% in their favor relative to some benchmark, depending on amount and currency. This is my primary go-to card for outside the USA.
Also worth mentioning (and was not so in 2011): the Discover card is now accepted outside the USA anywhere Diner’s Club is. Their website shows worldwide coverage; still absent in many places. There is a small DC logo on the back of the card; nevertheless I had it rejected at a restaurant in a hotel that takes DC, while the front desk of the same hotel had no problem. This card is terrible for ATM use as the withdrawal is treated as a cash advance, but I have had fairly good results with merchants because there is no conversion fee. And the purchases are eligible for whatever cash-back arrangement your card has generally. This card has no annual fee. Diner’s Club does. Go figure.
Bank of Internet USA (not to be confused with Bank of America) offers a free checking account which comes with an ATM card with no withdrawal fees. They also refund other bank's fees up to some small amount. I used their card in several countries in East Asia and Europe with no major problems. The only downside is that they will start charging a 1% currency exchange fee starting September 2011 (currently this is zero as well).
Typically, major U.S. banks charge huge fees, some hidden (e.g. Chase ATMs charge $5 fixed + 1% fee + 3% hidden exchange fee, in addition to destination bank charges, of course).
Avoiding destination bank ATM fees (overt and hidden) is also significant. If you have a specific destination in mind, try researching specific ATMs with low or no fees for foreign transactions.
I do know that Capital One does not charge a foreign transaction fee on their credit cards. I think they are the only major issuer that does not charge a foreign transaction fee. An Etrade debit card charges 1%. I have not found a debit card that does not charge a foreign transaction fee.
Minimizing ATM fees means carrying more cash around. I tend to carry a lot of cash but some people might not feel comfortable doing this.