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Being a points collector, I stay away from cash transactions whenever possible. Unfortunately, certain transaction just have to be performed with cash. This is particularly true when traveling or being stationed abroad, where credit card transactions are much less commonplace than here at home. The best we can do in those cases is the same thing we’re already doing with our credit cards, avoid unnecessary fees. Almost all major domestic banks and credit unions offer some form of military checking and savings accounts. The benefits offered by these accounts range from a monthly fee waiver to foreign transaction fee waivers. In my opinion, the two most important benefits are ATM surcharge and foreign transaction fee waivers and refunds. Basic checking and saving accounts should not have monthly fees, so I will not even count that as a benefit. It is important to read the fine print when a bank claims “no ATM fees”. That is mainly because, even if your bank doesn’t charge you a fee for using an out of network ATM, doesn’t mean the ATM itself won’t. This is why ATM surcharge fee refunds are so important. Below is a list of my four favorite military checking accounts.
Service Credit Union
I stumbled upon Service Credit Union (SCU) while stationed at Katterbach, Germany and haven’t looked back since. I still maintain my USAA account, but rarely use it for anything other than investment purposes. When you open a SCU checking account, make sure to open a ServicePlus Checking, which is free with military direct deposit. Here are some of the ServicePlus Checking account features:
- Dividends paid
- Get paid two days early with direct deposit
- ATM and international Visa fee waiver
- 20 free withdrawals at out-of-network ATMs, each month
- Free bill pay, free Visa debit card, and courtesy pay
The ATM and international Visa fee (foreign transaction fee) waiver is up to $20 per month, each. Dividends paid are not as much as you’d receive with a savings account, but it’s still nice to receive something for your money sitting in your account. On top of all this, if you open the account at one of the U.S. military installations in Europe, you also receive a European routing number (or IBAN, which is a combined account and routing number) in addition to a domestic routing number. This allows you to pay your European bills directly from your U.S. checking account, eliminating the need for a European checking account. Your IBAN is also permanent, which makes future European transactions very easy. Since I’ve had this account, I haven’t paid any fees, at any ATM, in any country. Loan rates at SCU are also nice; I received an 0.79% auto loan with SCU.
Navy Federal Credit Union
Navy Federal Credit Union (NFCU) is widely regarded as one of the best military financial institutions, and with good reason. Besides being known for outstanding customer service, they offer some exceptional products. Their free Active Duty Checking Account offers ATM fee rebates of up to $20 a month. However, their terms and limitations regarding this benefit aren’t very clear. It does state that the $1 fee at Plus system ATMs is rebated, including at overseas locations, but that could just refer to domestic ATMs at an overseas military installation. Also, there is no mention of any foreign transaction fee rebate. Not even a NFCU banker could positively answer those questions for me and didn’t even know what a foreign transaction fee was. Bottom line, if you’re heading to a more remote overseas location that relies heavily on the local economy, I suggest looking up a bank/credit union with a little more transparency. Other than that, the benefits are solid:
- Early Pay
- Free checks
- No monthly fee
These benefits seem fairly basic, but NFCU branches are also widely distributed domestically, which enables a traditional brick and mortar banking experience at pretty much any and all domestic duty stations.
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USAA is very similar to NFCU in terms of benefits, with the one exception that it offers more transparency in terms of fees. It offers 10 free withdrawals at USAA preferred ATMs per month and up to $15 a month in ATM fee rebates for all other domestic ATM withdrawals. That makes it clear that foreign ATM fees WILL NOT be refunded. It also states clearly that there is a 1% foreign transaction fee imposed by Visa as well. I appreciate this information because it helps me see exactly what I’m dealing with. USAA also offers early pay, no monthly fees and free checks, very similar to NFCU.
Simple offers a fresh, new and non-traditional banking experience. It isn’t military personnel specific, but I included it in this list because it offers some serious competition to the traditional military oriented checking accounts:
- No monthly fee
- No minimum balance fee
- No overdraft fee
- No in- or outgoing ACH bank transfer fee
- No card replacement fee
- No account closing fee
The “no overdraft’ and “no ACH” fee feature is very hard to find and extremely valuable in my opinion. In addition to this, you can use Star operated ATMs completely free. Simple also doesn’t charge a fee when using other domestic ATMs, but doesn’t refund potential fees imposed by those either. Internationally, you can use your Simple Debit Card fee free at all BBVA Bancomer ATMs in Mexico and BBVA ATMs in Spain. Again, Simple won’t charge you a fee for using other foreign ATMs, but won’t refund potential fees imposed by them. There will also be a 1% Visa foreign transaction fee which is also not refunded. Simple also makes saving very, well, simple. It let’s you set a specific amount to go into a digital envelope each day. Even a small daily amount can go a long way in just a few short months. Additionally, you can use the Simple app to see exactly what is still safe to spend on each spending category for the remainder of the month, hopefully eliminating the need for the “no overdraft fee” feature. Overall, the bank seems very intuitive and offers some truly valuable features.
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When deciding who to bank with, it is important to not only look at the bank’s reputation, especially if you’re a service member. One customer’s experience can drastically differ from your own, simply because your career path may lead you in an entirely different direction. If you’re certain that you will not be stationed outside of the U.S. or its territories, either again or at all, your banking options are much broader. You must now decide how important a brick and mortar institution is for you, or if the online/telephone banking route is enough for you. For those of us that are, or could end up overseas, there are options to still live fee free. But that may require an, at least, temporary move to a smaller financial institution, such as Service Credit Union (Andrews Federal Credit Union is another great option for Service member stationed in Europe and works closely with SCU). Either way, ensure to take your time when deciding, do your homework, and ask the right questions. Additionally, here are some general guidelines to follow if stationed overseas (this is all assuming you pay no ATM fees or foreign transaction fees):
- When withdrawing local currency, use local ATMs instead of on-post U.S. based ATMs, the exchange rate will be better. This is because at the domestic on-post ATMs, you’re buying a foreign currency from a U.S. bank. When buying foreign currency from a domestic ATM, you’re never getting the best deal. The same rule applies if you’re just traveling internationally. It is generally better to wait until you are at your destination to get the local currency from an ATM. It was actually USAA that advised me to do this years ago.
- Never, I repeat, never deposit the foreign currency into your U.S. checking or saving account. It doesn’t matter who you’re banking with. When doing this, you are now selling the foreign currency to your bank. This gives you the absolute worst conversion rate, because the bank wants to make money when they sell that local currency they bought from you. Think of privately selling your car vs trading it in. The car dealer will want to turn around and sell the car and still make a profit. Check out your bank’s conversion vs reconversion rates to understand how much money you’re losing when doing this. It’s always best to hold on to the local currency until you need it. If you do need to deposit the money for any reason, make sure it is absolutely necessary (paying bills for instance) and only deposit enough to cover that specific expense.
I know this article is focused heavily on international ATM fees and foreign transaction fees, but the reality is that the majority of U.S. military personnel will, at some point, be stationed outside of the continental United States (OCONUS). Even if not, it is nice to not having to be concerned about ATM fees when traveling and it is a benefit to us that is not easily attained by our civilian counterparts. It usually requires some form of private banking relationship and holding significant assets with a bank to have these benefits offered to you as a civilian.
What’s your favorite military bank and why? Who did you bank with when you were stationed overseas? Please comment below and don’t forget to sign up for our free newsletter and to follow us on social media.