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My daughter used a travel money card loaded with US dollars to with drawl cash from an ATM in Walmart Kentucky. She withdrew $100USD and was charged $2.50USD fee from our bank in Australia and $18.36USD by the ATM. Does this sound right? We are horrified. She is there on exchange for a year and it will be a very costly year if every time she needs cash is charged these amounts. I need advise please, which is the best way forward.

  • Sounds like a very high fee for the ATM, she's best going to a banks ATM and withdrawing large sums to make up for the Australia fee, they usually charge a fee if you're not with that bank but will be cheaper than a random ATM. Another idea would be to transferwise from her Australian account to an American friends account and get them to withdraw it out of their bank. When I lived in the states the highest ATMs were around $5 but this was 5 years ago. – BritishSam Jan 28 at 15:02
  • Walmart doesn't run ATMs, they contract that out to third party firms, and the right to serve Walmart is valuable to firms which prey on the working poor, who are often "unbanked" (unwilling or ineligible to get a bank account due to past overdraft or unlawful presence in this country). But even that sounds wildly excessive; I'd like to see that machine and its contracts/terms of service. Currently it costs AU$1.47 to buy USD$1, so that's not the exchange rate; though that may be ugly too. – Harper - Reinstate Monica Jan 28 at 15:03
  • That fee doesn't make any sense at all. I've never heard of an American ATM charging anything like that, and even if it did, it would have to disclose the fees on screen prior to withdrawal. You may want to ask about this on our sister site Personal Finance & Money to see if anything can be done about it. – Michael Hampton Jan 28 at 18:35
  • Could it be a double exchange fee? ATM sees that the cards is from Australia and asks your daughter if she want to be charged in USD or AUD. Your daughter chooses AUD, gets a bad exchange rate by the ATM and then your bank converts it to USD, again to another bad exchange rate. – Anders Jan 28 at 21:56
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I just returned from my semester abroad in the USA. A good option is https://transferwise.com/ . They offer a cheap way to transfer money to the USA.

Do not use Paypal. They are so expensive.

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  • Just a tip: if you look at youtube. you can find multiple referral codes where you get a completely free transaction... – xxx Jan 29 at 1:19
  • Tip2: if you want to use Apple pay. create an American Account. – xxx Jan 29 at 1:20
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Your daughter should be a savvy customer. Background:

America has unique subclass of people called "the unbanked". They cannot open bank accounts because they are present in the country illegally, or had past overdrafts. Many US financial services cater to the unbanked, and the fees/charges are positively usurious. Separately, many of the unbanked need to transfer money back to their country of origin, and foreign exchange fees are rigged to exploit them as well.

Walmart is a big-box variety store married to a grocery store, so it's a one-stop shop for people scant on both money and time, particularly the socio-economic classes who tend to be "unbanked". So a third factor on the price is convenience.

But Walmart does not run ATM machines, so the $16 is not Walmart's fault (technically). In some cases they have a respectable bank such as Chase as a sub-tenant, in other cases it's a "private" ATM machine run by the exploit-the-unbanked gang (and Walmart is a highly-sought-after location for exploiters, so I can see them outbidding the big banks for the tenancy). In the USA, one should generally run screaming from "private" ATMs not affiliated with a reputable bank.

All that to say: Your daughter can do much better.

PayPal as a way to exchange

PayPal prides itself in having sensible fees for money transfers and foreign exchanges. It is a good way to get money from A to B, and they've been in the business for 20 years, so they know what they're doing. So opening a USD-denominated PayPal account is probably a good start. But then, there's getting money out.

I haven't really explored whether PayPal has an ATM card that works directly. A few stores accept PayPal as a payment method, but it makes my skin crawl to be chained to only a few such vendors. Walmart is already lowbrow enough.

PayPal has a debit Mastercard, which is like an "ATM Card" and works in ATMs for cash withdrawals. (Nearly all ATM cards in the US have a Visa or Mastercard logo, and can be used as either a debit card or a credit card at your option. You can specifically request an ATM-only card, that only works in debit mode.)

  • However in either mode, the consumer protections are not as good as a real credit card, so I disrecommend doing this. It's harmless enough until you have a problem, then it's murder because the disputed amount is lost to you while it's under dispute. (and people doing ATM instead of real credit are usually the most vulnerable to being short money; again the underbanked take it on the chin.)

Banking as a portal to PayPal

For those who are bankable, such as those with lawful presence, America is a very cheap place to do banking. Several banks with vast bricks-and-mortar presences have free checking accounts, and it's exactly what it says on the tin. It is subsidized by "the banked" making honest mistakes, e.g. $36 overdraft fee, side offerings like credit cards, loans, investments, and commercial banking. It is not subsidized by the unbanked; they're served by totally different companies.

You can also avoid PayPal and deposit foreign cheques, or use wire transfers or Zelle, but you must be wary of disfavorable exchange rates.

An AU credit card

Now mind you, you have to check the standards in your home country and your relationship with your bank. But credit cards used to have very low fees and the best foreign exchange rates available. So simply charging your purchases on a VISA or Mastercard was a good way to get efficient foreign exchange. However, that's no longer consistently true in America, and I've had others tell me it was never true in their home countries. But check on it.

If you'd be subsidizing these accounts, you'd get an AU credit card in your daughter's name. No point getting a USA credit card (though that would be good for your daughter's credit rating if handled responsibly) since your goal is good foreign exchange.

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I would check with resources in the school.

First, there may be a faculty member responsible for exchange students who may be able to help.

Second, in the US there is a type of financial institution called a credit union, which is owned by the members. In the past, the teachers in a school system would form a credit union. Most of these smaller credit unions have tried to become bigger by allowing a wider variety of people to join, such as anyone in the state where the credit union is located. Ask a guidance counselor or trusted teacher which credit union most of the teachers belong to; the credit union may let the student open an account. The credit union that's popular with teachers will almost certainly have free ATMs near the school.

A word of warning though; credit unions, especially small ones, may be less sophisticated with international transactions than banks.

If you can't find any satisfactory credit union connected with a middle or high school, but there is a large university nearby, check them out. As an example of what you might find, see this eligibility page from the University of Southern California Credit Union.

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  • Originally, credit union membership was limited to specific, definable groups. Federal regulations were, however, loosened significantly a few decades ago. Thus, in addition to these sources, look for credit unions that serve specific cities or counties. For example, I have accounts at the (insert name of city) Community Credit Union, located in the eponymous city. – DavidSupportsMonica Jan 28 at 18:31

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