India trip: $5 ATM fee rip-off

During my India trip, Priya and I spent about 3 days in Trivandrum. By the last day, we were running out of cash. I didn't want to use my Bank of America ATM card as I was a bit afraid about the service fees. But we really needed the money; so decided we'll use an ICICI ATM. Since ICICI is supposed to be one of the best banks in India, I thought it is a much safer bet than any of the tons of other company ATMs.

After a couple of days of our return, I checked my online account and was shocked. There were two service fees; both mentioning ICICI. One for about $0.91 and another for $5. During all my previous use of ATMs in India, the service charge was $1.50. It was never $5. The worst part this time is, the ATM did not inform me of the service charge. It used to say 'there will be a $1.50 fee.. do you want to continue?'. Nothing of the sort; I punched in Rs 4000 (about $90 and few cents) and there came out the money. No notice whatsoever about any service fees. I think they should have at least informed me of the potential service charge.

A couple of days back, I called up Bank of America to try to waive or reduce the charge. The lady who answered told me that it is all stated in the policy when I opened the account. Do they expect me to read something that was given to me in 1998? I told her that at least the ATM should inform me of the service charge. She said sorry and nothing can be done. She also said the $5 was charged by my bank and not ICICI. I was cursing ICICI until then. I realized I can't do much; I just told her that it is a real rip-off and asked her to put those in any customer feedback form if she can.

Some lessons learnt for getting money oversees.

1. Credit cards are still one of the best methods. Citibank master card charges about 3% total. It seems master card charges 2% and citi another 1% (it may be the other way; but the total is 3%). I read Master cards give some of the best exchange rates. I do see that in my credit card statements. I saw American express charging only 2%. But overall I am not fully sure amex gives a better deal with exchange rate. So overall I think credit card is still the way to go.
2. Most banks charge 1% on the amount withdrawn and a flat service fee of $5. So unless really needed, avoid this method. If you really have to do, make a few transactions of bigger amounts. In some countries (India is not one of them) like UK, Cananda, you can use a specific banks network to avoid the fee. For bank of america, it is Barclays in UK, Scotia in Canada (Global ATM alliance). Google or check your banks website. The customer service lady told me that even if I use a Scotia bank ATM in India, I will be charged. There was one in Coimbatore which we had planned to use. BTW, if you are betting on going to the bank of america office in Madras, you will be surprised. There is no ATM there. The security person there (the office was closed that day) said BofA in Madras handles only corporate accounts these days.
3. Convert US bills ($20 or higher) through your "local" contacts in India. I guess, by and large, this is where you get the best deal. Of course it may not be totally legitimate.
4. I heard on Michael Finney's show on KGO, that traveler's check is no good. You don't get good exchange rates.

I wanted to try 3, but didn't carry sufficient dollar bills. I think that is
something to try out on future trips.