Using your card abroad is free, but the exchange rate often makes the transaction more expensive

Most banks allow their customers to withdraw the amount they need from an ATM abroad without a fee for certain types of accounts. Cashless payments at merchants are also free. But the foreign exchange rate can significantly make the transaction more expensive. The differences between banks are considerable.

When traveling abroad, many Czechs no longer carry wallets filled with euros, dollars, or the currency of the country they are traveling to. Gone are the days of exchanging Czech crowns for local currency in foreign exchange offices.

Czechs are fond of cashless payments, which also applies to payments abroad. If they need some foreign cash, they withdraw it from an ATM on the spot.

Withdrawals are often free

Banks now offer their clients products, or accounts, that include free withdrawals from all ATMs in the country and abroad if the conditions are met. However, if you do not have such an account, be prepared to pay a few crowns per withdrawal.

“At some banks, clients can pay a fee of up to CZK 125 for withdrawals abroad. At the same time, it is fair to say that practically all of them have tariffs where withdrawals are much cheaper or free. It is, therefore, a good idea to keep an eye on what fees apply to the client,” said Ivana Pícková from Creditas.

Exchange rate differences are significant

However, the foreign currency (FX) exchange rate your bank uses can make the whole transaction more expensive, whether you are withdrawing from an ATM or making a cashless payment at a merchant. Differences between banks can be as much as a few tenths or a few percent.

For example, the difference in the “foreign exchange sale” rate on July 20 was 1.54% for the euro when comparing the lowest rate at Creditas (CZK 24,980/EUR) and the highest at UniCredit Bank (CZK 25,389/EUR) among the other central banks. The difference was 1.46% for the dollar when comparing the lowest rate at Creditas (CZK 24,409/USD) and the highest at Raiffeisenbank (CZK 25,389/EUR).

For more exotic currencies, which banks do not have in their exchange rate list, the conversion into euros or dollars is first made at the rate of the given card association (Mastercard or VISA) and then into crowns according to the exchange rate list of the shared bank. In principle, the dollar and euro exchange rates are usually sufficient to know how good the bank’s offer is.

At the same time, however, it is necessary to check whether the bank does not add an extra percentage for this transfer in these cases.

With or without conversion 

Another potential threat to your money is DCC or Dynamic Current Conversion. This means that when you make a cash or non-cash withdrawal, you are offered a choice of two options, either “with conversion” or “without conversion” (with conversion/without conversion).

If you choose “with conversion,” the withdrawal/payment will be converted into crowns. Still, the transaction will be burdened with a high margin of the local bank, making the transaction financially disadvantageous.

If you choose the “without conversion” option, the current exchange rate offered by your home bank will be used.

However, many domestic banks already allow customers to block unfavorable ATM withdrawals or payments abroad in their mobile or online banking.