Est. 2020

Banks for Traveling

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Because of the talks about inflation and the stimulus money in the United States, I thought it would be fun to talk about banking and traveling. 

Look, there are numerous “Best Banks for Foreign Travel” or “Best Banks For When You Travel” lists. So, I thought it would be fun to compare big banks versus small banks for traveling.

After all, there is not always a mattress you can use to hide your cash. 

(Plus, could you imagine hiding cash underneath your bed in the hostel?)

If anything, another reason travelers need a bank account is for a sense of security. Everyone has heard about subtle pickpockets, theft, or even being robbed. 

Now, I don’t want to scare anyone from travel, and I do believe that the United States does not accurately portray countries. (Even our own… sometimes.)

However, things happen. And it is better to prepare for the absolute worst circumstance, especially when it comes to money and traveling. 

Pro Tip: If your purse/wallet/backpack/daypack is ever stolen, call your bank to lock your debit card. This will prevent charges that YOU may have to pay for. 

Most debit cards do have sources of fraud protection, but not nearly as much as credit cards. 

Additionally, debit card purchases *typically take less time for the transaction to settle. (This is less so if you decide to pick a large bank i.e Capital One or Chase for your world travels.)

Speaking of fraud protection, I recommend using a credit card. (Or multiple ones.. more on this below.) 

I do not recommend you use credit cards to fund your trip. However, credit cards provide an extra layer of security while you travel. 

Most times, credit cards are not associated with your primary bank. And if they are associated, you still need to transfer funds from your account to the credit card account. 

Additionally, most credit cards have what’s called “fraud protection.” This means they have the ability to either A) Dispute charges B) Stop all charges to your credit card C) Give you a new temporary credit card. 

There is an increasing number of banks that include fraud protection for debit cards, but it is taking some time. A great explanation of credit vs debit card fraud can be found here. 

What are the types of banks for traveling?

Alright, now that I have scared you… There are going to be two types of banks that every traveler needs to know about: small, community banks vs. large, international banks. 

Examples of Broad International Banks: JP Morgan Chase, Charles Schwab, HSBC

Examples of Small, Community Banks: Anything with less than $1,000,000,000 in net assets.

Now, I know that these is a broad, overgeneralization of the banking industry. However, this isn’t a blog post about the financial structure of banking. 

The banks travelers use (especially full-time, international traveler) is extremely important. 

So, what are the pros and cons of large banks?

Pros of Large Banks for Travelers

 

Banks for Traveling
  • International presence. 

For example, Wells Fargo has branches in South Korea, the UAE, Argentina, and Ireland. 

Whenever you are traveling for business or as a digital nomad, access to a physical bank could be a huge advantage to you. 

This opens the possibility for better currency exchange rates, no ATM charges, and access to currency if you account is locked.

 

  • Phone Apps

Okay, so is the biggest reason I have a bank account at a large, international bank. 

It’s not that small banks do not offer apps for their customers, but large banks have access to millions of dollars to create a high quality app. 

Just by having my phone, I can check account transactions, dispute charges, and deposit mobile checks.  

The only potential downside to an app is the lack of internet service. But, most places have internet anymore. I even had cell phone service at the top of the highest point in Colorado! 

 

  • Different types of accounts

I grew up in a small town. 

When you grow up in a small town, you become use to only having one option for everything. One place to purchase gas. One place to eat… 

But when you bank at a large, international bank, there may be six different checking account options, two different savings, and credit cards!

Having the ability to choose between different banks can help travelers as each traveler has different needs. 

Cons of Large Banks

  • Contacting a real person

Whenever you are traveling, it may be necessary to talk to a real person so they can understand your individual situation. 

However, this may not be possible at a large bank. 

In my experience, I talk to a robot first, then I was placed on hold, and I talked to a person after about 30 minutes!

If the situation would’ve been bad, I could’ve been in trouble!

  • Large Banks are not flexible with individual accounts. 

Look, it’s nothing personal. However, big banks serve millions of customers every day. Because of this, strict rules were created to maintain profitability. (And to follow the Federal Reserve’s guidelines.)

If you think they are strict now, wait until you buy a house. They have SO many more rules too. 

A larger bank’s primary purpose (especially public ones) is to maximize the wealth of the shareholders. 

So, one way in which large banks make money is via fees. This could be avoided via account minimums or meeting a number of transactions per month. 

This is extremely important for international travelers. The best banks for international traveling will offer no international transfer fees. (Or even better: NO ATM FEES!) 

One more type of fee: Closing account fees! Be careful when you close your bank account!

Pros of Community Banking

  • Community Service

Sometimes, there is nothing better than small, hometown service. Especially when you are traveling internationally, you might feel relieved to talk to someone you know ASAP. Plus, this customer service is often quicker, as the bank does not serve as many people. 

Best banks for Travel

 

  • They can bend the rules (a bit)

Small banks also have less restrictions and rules than the large banks. (Or they may have a gray area) This doesn’t mean they are going to give you $100, but they might be able to unlock your account faster. 

Additionally, they may decide to wave certain fees, like the occasional ATM transaction. 

  • They support your local community

Alright, this is my favorite aspect of community banks. Community banks only have a few locations, so they want to see the local town grow and succeed. 

This takes many forms, from community-style BBQs to small business loans.

My former, community bank offered a back-to-school BBQ tailgate every year. 

I don’t think I have ever seen JPM give back to the community in anyway except dividends or through their organized charities.  

Cons of Community Banks

  • Community Banks are limited

Because of their small size, community-style banks are limited in numerous ways, and this can be disheartening when you need a bank while overseas. 

The first major problem is the lack of a (good) phone application. 

Like mentioned above, banks spend millions to develop a good app. And small banks don’t have that option. 

For me, it is a requirement that the bank has a good app. After all, the bank is probably not open at 3 AM while you are in rural Turkey. 

Additionally, these banks are limited in their accounts they offer. I had to switch banks, as my bank did not offer a single debit card that did not charge an international transfer fee. When you live overseas, this is HUGE. 

  • You may never want to talk to someone from your hometown

Just me? If you’re from a small town and moved away, you would get it. 

  • Out-of-network ATMs

This could be seen as a continuation of fees, but it belongs in a different category. 

International travelers, when out of network, are going to be charged an ATM and an international transfer fee from the bank when you decide to withdraw money. They just lack the networks that large banks have. 

Let’s talk about credit cards

Banking Credit Cards Stock Image

I do not recommend you use credit cards to fund your trip. However, credit cards provide an extra layer of security while you travel. 

Most times, credit cards are not associate with your primary bank. And if they are associated, you still need to transfer funds from your account to the credit card account. 

Additionally, most credit cards have what’s called “fraud protection.” This means they have the ability to either A) Dispute charges B) Stop all charges to your credit card C) Give you a new temporary credit card 

Also, when used right, credit cards can provide additional benefits beyond just security like miles or points!

In Conclusion

Whenever you pick a bank, don’t worry about interest rates. Sure, 1.5% for a savings account looks nice, but this won’t be able to fund anything. The most important feature when choosing a bank is bank size. I recently went through this process myself, and I like large, multi-national banks.

For me, I appreciate the online flexibility and an international presence. Granted, I like traveling to different countries. If you plan on living in a certain city, just make sure your bank has a branch.

So, what type of bank account work for you? What banks do you recommend for travelers?

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