Key Takeaways
The Schwab debit card has no foreign transaction fees, unlimited ATM fee reimbursements, and great exchange rates.
Linking your Schwab checking, and brokerage accounts enables easy cash management and automatic fund transfers.
The Schwab debit card saves time and money for overseas travel compared to traveler's checks and bank exchanges.
Many of you have been telling us about the great overseas trips you took this summer (or are planning this fall). We love seeing your photos and hearing your stories. One recurring concern is dissatisfaction with unfavorable exchange rates on the U.S. dollar and elevated international transaction fees.
It doesn’t have to be that way.
Many of you are skilled at securing great deals and earning points with your credit cards, yet there are significant benefits to using debit cards.
Schwab's debit card, for instance, is a great option because it can be tied to your checking and brokerage accounts at Schwab for seamless cash management, reporting, and great benefits on travel. (NOTE: Schwab is Novi’s custodian).
Let’s start with cash management. When we meet with clients, we ask about their cash flow situation. Do we need to increase your distributions? Do you need extra money for a major purchase or an upcoming trip?
With linked checking and brokerage accounts, you’ll never worry about overdrafts. If your balance falls below $10,000, we’ll automatically transfer the necessary funds from your brokerage account, and all transactions will be included in our monthly reports. For a major expense or travel, you won’t need to request more cash if there’s enough in your brokerage account, as we maintain a standard cash reserve for three months of living expenses. You can pay vacation bills directly from your checking account, and any extra cash will be automatically pulled from your brokerage. ACH transfers can take days without linked accounts.
Again, another benefit of having your checking and brokerage accounts linked at Schwab is the debit card you receive. We strongly recommend using a debit card for overseas travel instead of traveler’s checks (remember those?). The Schwab Debit card makes it easy to access cash in a foreign currency when traveling abroad and you can also use it as a travel spending card.
Here are some of the benefits of the Schwab debit card:
No annual fee.
Unlimited ATM fee reimbursement. This gives the flexibility to use ATMs anywhere in the world without worrying about fees.
No foreign transaction fees on purchases overseas.
Great exchange rate when withdrawing cash/purchases in a foreign currency.
Even with all these benefits, I realize some of you may not want to switch your main checking to Schwab because you’d have to re-set all your autopay bills to this new account. I get it. Instead, consider setting up a modest checking account at Schwab as a “secondary travel account” when traveling abroad due to the impressive travel benefits.
Real-World Example
One of my clients now uses her Schwab checking account as a travel cash resource. Previously, she avoided airport ATMs due to high fees and poor conversion rates, often spending hours finding banks for better rates after landing. With Schwab’s ATM fee reimbursement and favorable conversion rates, she can now use airport ATMs without worry and head straight to her hotel to relax.
Further, the ATM and linked accounts give us great insight into our client’s cash needs throughout the year. This allows us to position your financial accounts better and update your plan promptly.
Travel Tip When Using Foreign ATMs Abroad
When using a foreign ATM, the machine will typically ask you if you would like to convert the currency at the machine’s exchange rate. Be careful. The exchange rates on foreign ATMs are usually terrible and will often subject you to a 10% to 20% “haircut” below the market exchange rate. To use your debit cards at a better exchange rate, you must first select “Decline” when prompted to use the machine’s built-in exchange rate.
Conclusion
If you're interested in opening a Schwab Checking account, contact us for assistance, as Schwab is our custodian. For guidance on cash flow management, travel planning, or debit card options, feel free to reach out—I’m here to help!
Devin Starr, CFP® Associate Wealth Advisor at Novi Wealth
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