Guide to Choosing the Best Banks for Travel

  • Post by Nomadic Method
  • Jun 15, 2019

With over hundreds of options in choosing bank accounts, making a decision can be daunting. Sometimes we end up choosing the brick and mortar bank down the street because we don’t want to make a decision. Having accounts that work in your favor while you’re abroad is important. There are banks that will make your life miserable while abroad and suck your money dry in ATM fees and foreign transaction fees. Being prepared before you travel is only going to help you down the road.

First of all, you’ll need to have a checking account and a savings account. Prioritize these accounts accounts with your checking account as your primary, however your checking account is only a funnel for your other accounts. Think of it as the bottleneck for money going in and money going out. Secondary is your savings account. This is your ‘Do Not Touch’ account. This is what will be paying you when you’re abroad. Make sure you’re educated in your bank accounts. There are some accounts with overdraft fees thus if you’re not paying attention and you withdraw $1 over your account, there goes $30-$50 unnecessary dollars spent.

There are three ways of breaking down strategies for bank accounts. First, the Couch Potato method. This is for the person who really does not want to put time and effort into managing there accounts. Second, the Average Soul method. This is the person who wants to capitalize on high-yield accounts but doesn’t want to constantly have to shift and transfer money several times a month. Finally, the Maximizer method. This is the person who’s great at working systems to their advantage and does research on how to milk every last penny from banking institutions. Majority of us fall under the Average Soul method but lets break down each one.

Couch Potato Method

So you like your pizza bagels, that’s fine, just know there are better ways to save money just as there are better options for your diet. Pick your local brick and mortar bank that does not require monthly ‘service fees’. Service fees are ridiculous. I do have a strong opinion against the fat cat banks who are out to line their pockets with fees that are unnecessary. They are not your friend and instead of helping you, they’re trying to get you in some hidden fee when you signed away in blood. Ask around what your friends and family use. Do some research online. Even go and visit the local branch and tell them your shopping around but not ready to use them. Credit Unions are hit or miss but there are some good ones out there. For example, a local credit union in Portland, Oregon called Trailhead uses a great local credit union that has an impressive 3% yield checking account but she has to make “10 qualified debits each month” to activate the 3% yield as of summer of 2018.

Average Soul Method

Welcome to the masses. We like doing a little bit of research and maximizing our accounts but not to the extent of constantly moving money around. We need a checking and saving account but they don’t have to be down the street. We’re ok with utilizing the technology that’s now in our pockets to find the best rates. These days, online banking is the new normal. I have my favorites (which I’ll share below) but do your own research. Check out Bankrate and NerdWallet for checking and savings account reviews and what fits your needs. Be sure to have the mindset of living abroad when making your decision. Ask yourself, “will I be penalized if I withdraw from a foreign bank?” or “if I use my debit card, will there be a transaction fee?” To get started, I’ll point you to my favorites.

Checking Account: Schwab Bank High Yield Investors Checking Account
This is a 100% online checking account and has the best benefits for travelers. Yes, it’s intended for investors but that doesn’t mean you have to start watching the NASDAQ ticker. You do, however, have to begin by opening a brokerage account with Schwab. My current balance in my brokerage account is $0. I have never put money in my brokerage account. The only reason I have a Schwab brokerage account is so I can have the investors checking account. No strings or whistles here, just an empty open brokerage account. One last thing to note, if you receive paper checks, you can still deposit them through their ‘Deposit Check’ function on their app. All it does is take a photo of the front and back of your checks with your signature and poof, it’s in your account in about 3-4 business days. Here are some key benefits to the High Yield Investors Checking Account:

  • $0 monthly fee
  • $0 minimum balance
  • .15% APY
  • $0 foreign transaction fees
  • Unlimited ATM rebates at the end of the month
Did you catch those last two? You want to hold on to your money, not let the middle man cut your purse. You will use an ATM often abroad. Sometimes banks state they have $0 foreign transaction fees and unlimited ATM withdrawals but they forget to tell you about the foreign bank you are withdrawing from that is charging you to use their ATM or that Visa will charge the foreign transaction fee. Schwab has truly $0 foreign transaction including the Visa transaction fee and rebates all of the ATM fees at the end of the month, including the foreign bank. While in Europe, it was normal for a 5 Euro transaction fee for every ATM withdrawal. On top of that, if I used Wells Fargo or Bank of America, they have a 3% foreign transaction fee. For me to take out $100 at an ATM in Europe, I end up losing $8.60 every time I use an ATM. Not only does the Investors High-Yield Checking Account have a $0 ATM fee, it rebates all the transaction fees from foreign banks at the end of the month. The main flaw to the High Yield Investors Checking account is their app. It’s clunky, hard to find necessary tools such as bank transfers, and it has a lot of jargon that is intended for investors. Maybe they’ll have a better UX design later but for now, I’m willing to clunk around with them while abroad

Savings Account: Ally Online Savings Account
Ally Online Savings Account was rated Best Online Bank in 2018 by Money Magazine for good reason. It is a fairly easy platform with no hidden fees. They do have fees but they are upfront about it on their signup page in bold. Just don’t do a bank transfer more than 6 times (who does that anyways?). The main reason for having a savings account is not to touch it, remember? Just put money in it and watch it grow. That’s why I chose Ally, it’s a straightforward account with an high APY. Here are some key benefits to Ally Online Savings:

  • 1.6% APY
  • No monthly fees or minimum balance required
  • Connect any external bank with no transaction fees in or out (unless you’re using the Federal Reserve Wire Network. Don’t do that.)
That’s it because that’s all you really need. When this account is full and your abroad, flip the switch and have it start paying you instead of you paying it.

Accounts to Note: Simple Online Bank
I love Simple Online bank. I never knew a man could fall in such a deep love with a bank account until I met Simple. Simple is a great checking account for keeping you on track. It’s another 100% online account but it differs from the rest. It’s called ‘Simple’ for a reason, it’s all about the app and how it relates to your account. Simple offers an envelope system and ‘Safe-to-spend’ feature. You just set up a goal like ‘Rent’ and Simple will either automatically fill it when a paycheck is deposited or fill it over time based on your criteria. When you set up an envelope for each of your expenditures, Simple will tell you how much you have that is ‘Safe-to-spend’ instead of how much you have in your account. They also have the best customer service I have seen out of any tech platform. That’s right Amazon, Simple wins. Their tech support is mainly through the app with just a texting based system. When I used them before traveling, I remember needing help with a check that wasn’t depositing in time and after they helped resolve the issue, the customer service agent sent me a long drawn out gif of a gladiator fighting a lion. It had nothing to do with our conversation yet it had everything to do keeping our conversation between humans. Here are some key features to Simple Online Bank:

  • 1.75-1.90% APY (with a checking account?!)
  • Goals and ‘Safe-to-Spend’ feature
  • Trackable spending
  • No minimum deposit to open
  • No monthly service fee
  • ATM Map
The only reason I use Schwab High Yield Investors Checking over Simple is because of the Unlimited ATM withdraw feature and $0 foreign transaction fees. Although Simple states they have $0 transaction fee for a non-BBVA ATM, you can still get charged by the foreign bank, just not Simple. Simple also states they do not charge a foreign transaction fee, however Visa does.

Capital One 360 Savings Account
If you feel safer going with a name you know, I recommend Capital One 360 Savings Account. Capital One is one of the big financial institutions but their online savings account is straight-forward, which again, is all you need. It’s great for a beginner savings account in that totes being ‘fee-free’. It’s app is fairly intuitive but you can get he same from Ally. Here are some key features to Capital One 360 Savings Account:
  • 1.7% APY
  • No monthly fees
  • $0 minimum balance
That’s pretty much it. Again, the only reason to choose this is because you feel safe using a recognizable name. Time to put emotional connections aside and start using logic when choosing accounts to work for you instead of against you.

Maximizer Method

You love numbers, you love spreadsheets, you love capitalizing, and you love schedules. You’re a Maximizer. You have done a lot of research not only on which checking and savings accounts to open but also fund accounts like CD funds and Money Market accounts. You’ve figured out your funnel system that diverts money not just to your bills and savings but also to your investment funds and back to your savings account. You have an aggressive financial advisor and willing to take investment risks. If you choose to be a maximizer, I recommend working with a financial advisor who can recommend investment funds and help you set up your accounts to work best for you. Some financial advisors require a fee and some work for a financial institution and don’t cost you a dime. Just know the financial institution advisors will try and steer you towards their companies investments. There’s nothing wrong with that, just don’t be hasty and do your own research. I have a financial advisor with Waddell and Reed and he’s done wonders for helping me reach my travel goals. Yes, he helped me set up a retirement account with Waddell and Reed and my return fund is a very low risk mutual fund portfolio thus I felt safe opening these funds. In 2010, my financial advisor helped set up an insanely small portfolio of only $2,000. I forgot about it until I came back from traveling. Now grateful I invested the pennies, I can live comfortably for 4 months while I figure out the next revenue stream. The masses would say that’s a pretty good deal but a Maximizer would consider it lazy and that I could have funded several years if I only managed the funds aggressively. If this is you, awesome, crunch those numbers and reap the benefits.

What's Next?

Once you’ve made your decision, it’s time to start forecasting and automating. Check out the article on automating your expenses based on your projected budget and savings rate. This only makes saving easier and more achievable. For more tips and tricks, stay tuned or check out my favorite financial blogs, NerdWallet and ChooseFI. Have your own banks you prefer for travel? Maybe some tips and tricks to save more? Feel free to email us on the contact page!