How to avoid bank charges abroad?

11 June 2022
Bank charges abroad: what are the charges and how to avoid them? Bank - Luxembourg

Have you ever travelled outside the Euro zone? Then you probably know that there can be some unpleasant surprises when you return from your holiday. Not least because of the many bank charges abroad.

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

All bank charges abroad

When you go to a country outside the Euro zone, banks usually charge several types of fees. 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 fees can be as high as €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 about them on this comparative table.
  • Fees for withdrawals in another currency. It is about 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 fee 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 and 2% of the total payment amount.

The values given here are only examples. Each establishment has its own fee schedule regarding 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 payment by card in a foreign currency, etc.).

We advise you to consult your bank's tariff brochure to make sure you know what the charges are before you travel. This will help you to anticipate and avoid them.

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How to avoid paying bank charges abroad

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

Avoid cash withdrawals abroad

It is better to withdraw a large sum of money at once than to make many small withdrawals. This is because, for each withdrawal in a foreign currency, you will have to pay a fixed fee. The more you do, the more you will 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 all the money with you, so that you don't lose it all if it is stolen. Leave some of it in your locked suitcase or hotel safe, and take just what you need for the day.
  • Exchanging money at a bureau de change before leaving This means that you will only have to pay exchange fees once, and you will not need to make any withdrawals on the spot. But this requires you to anticipate the amount of money you will spend on the spot. 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, the 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 advise you to always choose to pay in the local currency.

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

To find out more about this practice of some retailers outside the Euro zone, see this article.

Opting for a "Travel Abroad" option

Some banks offer options that cover the costs of conversion, withdrawal or payment abroad. For an extra ten or twenty euros per month, you can carry out your transactions freely, without any additional costs.

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 travel

To avoid any unpleasant surprises, more and more people are opting for an account without bank charges abroad. Many neo-banks have developed mobile 100% offers with a bank card a priori free of charge abroad. Among these banks, the best known are

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

You can open an account for free from your phone in most European countries.

But beware, Contrary to popular belief, these accounts are not 100% without bank charges. Depending on the neo-bank you choose, you could have :

  1. A cap on the number of withdrawals allowed each month (and fees above these caps)
  2. Additional exchange fees, each time you convert your Euros into a foreign currency
  3. Fees 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, do not hesitate to consult our offer selection.

How to choose a bank in Luxembourg?

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Frequently Asked Questions (FAQ)

How do you know if you have expenses abroad?

Check your bank's fee schedule. You will be able to find the charges for withdrawals from a third-party ATM, the charges for withdrawing money outside the Euro zone, and the charges for paying with a card in a foreign currency. If you can't find the price list, contact your banker and ask for the fees.

How to avoid bank charges abroad?

You can opt for a travel option with your bank: you will pay an extra fee each month, but you will not have to pay a fee for every card withdrawal and payment abroad. You can also open an account with an online bank such as N26 or Revolut, but contrary to popular belief, these accounts are not 100% free of foreign banking fees.

Which bank card to use when travelling abroad?

If you often travel abroad, you can opt for an N26 or Revolut account. These two new banks offer low banking fees abroad. However, be sure to read the terms and conditions carefully: depending on the account you choose, you may still have to pay withdrawal, exchange or card payment fees. Also, depending on your country of residence, bear in mind that you will have to declare this account to the tax authorities in your tax return.

Can I pay abroad with my card?

If you have a Luxembourg credit card, you can pay abroad without any problem. However, you may be charged commissions and exchange fees for each payment made in a foreign currency. Ask your bank or consult your account's price list to find out about these foreign bank charges.

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