How can I avoid bank charges abroad?

Have you ever travelled outside the Euro zone? Then you probably know that you can be in for some nasty surprises when you get back from holiday. Not least because of the many bank charges abroad.

Withdrawals, exchange into local currency, card payments... Here's an overview of the main bank charges you'll have to pay abroad. We'll also give you some tips on how to avoid paying them on your next trip.

All bank charges abroad

When you travel to a country outside the euro zone, banks generally charge several types of fee. These are as follows:

• Fees for withdrawals from third-party ATMs. Luxembourg banks all charge a fee every time you withdraw money from an ATM that does not belong to their network. These charges can be up to €2.50 per withdrawal, depending on the bank. However, some banks include a number of free withdrawals each month in their offer. You can find out more at this comparative table.
• Withdrawal charges in another currency. These are fixed fees which are of the order of a few euros for each withdrawal made in a currency other than the euro. One of the main Luxembourg banks, for example, charges €4 per withdrawal.
• Charges for payment by card in another currency. There may be a fixed commission and variable costs for each card payment made in a foreign currency. With some Luxembourg banks, a card payment may cost you a fixed commission of €0.50 plus 2% of the total amount of the payment.

The values given here are examples only. Each establishment has its own price list on bank charges abroad. The amount may therefore vary from one bank to another in Luxembourg.

Some banks also offer specific advantages abroad (free withdrawals, no commission for card payments in a foreign currency, etc).

We advise you to consult your bank's rates brochure to make sure you are fully aware of the charges before you leave on your trip. This will help you to anticipate and avoid them.

How to avoid paying bank charges abroad

Now that you know the main bank charges abroad, here are a few tips on how to avoid them when travelling.

Avoid cash withdrawals abroad

It's better to withdraw a large sum of money all at once than to make many small withdrawals. That's because for each withdrawal in a foreign currency, you will have to pay a fixed fee. The more you do, the more you pay.

There are two ways to reduce these costs:

• Make one or two large withdrawals during your trip. However, if you choose this option, be careful not to carry the whole amount of money with you, so as not to lose it all in the event of theft. Leave some of it in your locked suitcase or in your hotel safe, and take just what you need for the day.
• Exchanging money at a bureau de change before you leave This means you only pay the exchange rate once, and you don't need to make any withdrawals on the spot. But you need to plan well in advance how much you're going to spend when you get there. Similarly, keep your banknote envelope in a secure place for the duration of your stay.

Always choose to pay in the foreign currency for card payments

In some shops abroad, card payment terminals will offer you the option of paying in euros or in the local currency.

In these cases, merchants have agreements with foreign exchange companies to offer payment in the cardholder's currency. But with this solution, exchange rates are very high. If you don't have too many bank charges on card payments abroad, we recommend that you always choose to pay in the local currency.

This means that your bank will apply its own charges. The advantage is that you'll know what they are in advance. You won't have any nasty surprises.

To find out more about this practice by certain retailers outside the euro zone, see this article.

Opt for a "Travel abroad" option

Some banks offer options that cover the cost of conversion, withdrawals or payments abroad. For an extra ten or twenty euros a month, you can carry out your transactions freely, at no extra cost.

This option is particularly interesting if you often travel for work. However, not all banks offer this option: check with your banker before you travel.

Choosing a free bank account abroad for your travels

To avoid any unpleasant surprises, more and more people are opting for an account with no bank charges abroad. Many neo-banks have developed mobile 100% offers that include a bank card. a priori free of charge abroad. The best-known of these banks are :

• The German neo-bank N26
• The British neo-bank Revolut

You can open an account free of charge from your telephone in most European countries.

But be careful, Contrary to popular belief, these accounts are not 100% free of bank charges. Depending on the neo-bank you choose, you could have :

1. A ceiling on the number of withdrawals authorised each month (and commissions above these ceilings)
2. Additional exchange charges each time you convert your Euros into a foreign currency
3. Charges applied to your card payments

In general, these fees are still lower than those charged by most traditional banks. However, we advise you to analyse their offers in detail before opening an account.

Finally, if you prefer to opt for a better bank in Luxembourg, don't hesitate to consult our selection of the best bank accounts.