Updated by 09.06.2023
What Every College Student (and Their Parents) Needs to Know About Money Before Studying Abroad
Is Your Child (Student) Traveling Abroad This Year?
Every year as the holidays come to an end and winter sets in, scores of college students begin packing their bags and setting their eyes on a destination a little further from home than their standard college town. Sophomores and juniors turn to study abroad programs to widen their horizons, explore new frontiers and gain that added experience from a foreign land, new friends, and an exciting unfamiliar culture.
Managing a foreign bank account for a short period of time isn’t easy or ideal, and when the primary sources of payments are coming from U.S.-based endowments, scholarships, stipends, or parental allowances, it’s easiest to manage payments on the U.S. side. Our staff writer, Rishe, filled us in with some tips from studying and living abroad to managing online payments as a consumer:
1. Traveler’s Checks Are Dead
The first thing anyone should know is that traveler’s checks are gone, done, obsolete. Don’t be the fool who walks into a foreign country looking to exchange them because it will take you ages to even find someone who’ll do it for you, plus cost an arm and a leg.
2. Join the Global ATM Alliance
After spending several years living and working abroad, as well as semesters studying abroad, Rishe tells other travelers that in reality, changing currency is really a waste of time and money. Most banks and even guys off the street will charge you a commission (even the commission-free ones they build it into the rate) and their rates won’t be ideal. The best rate, at the end of the day, is directly from an ATM. Set up a debit card (which enables you to withdraw money at ATMs, but also make credit card transactions anywhere – even in Europe, where most places require a PIN) from a bank that is part of the Global ATM Alliance. In the US, this is Bank of America. That means that when you withdraw cash from ATMs that belong to Barclays in the UK or Spain; BNP Paribas in France, BNL d’Italia in Italy, or Westpac in Australia and Oceania, you won’t be charged the usual $5 or more fee. According to Rishe, “I’ve been living in the US for years, and when I go home to visit Australia, it’s the easiest thing in the world for me to withdraw cash from my US Bank of America account with a Westpac ATM”.
3. Avoid Throwing Away Money on Banking Fees
Check which banking fees your home bank is probably currently charging monthly. If you’ll be earning money in the country you’re living, whether through a student stipend or part-time job, it’s probably worthwhile to set up a local bank account. A bank account lying dormant (without regular payments being made, or savings accessed), could incur monthly fees that eat away at the last few bucks left in there. See if you can disable regular monthly fees while you’re away.
4. Be Wary of Foreign Transaction Fees and Costs
Instead of using an online payment transfer, taking Mom’s credit card, or having cash or checks mailed to you, the simplest way to manage money when studying abroad is using a standard bank account, online banking, and an ATM card. Parents or organizations back home can deposit allowances or stipends using online banking, and withdrawals can be made for free at ATMs part of the Global ATM Alliance. Using a parent’s credit card will often charge a 1-2% transaction fee for each transaction. ATMs charge too, but not a percentage: often, it’s just a flat fee per transaction, which you can easily eliminate by being part of the Global ATM Alliance, as above. Using the ATM card method is a far more cost-effective way to spend money while abroad. Even friends back home can send money using their online banking transfers and you’ll have it in days. If you are being charged a fee to withdraw, try to take out larger sums of money at once: The flat fee will go further, and you still won’t be charged the high percentage as credit cards do. With online banking, there’s really no need to worry about cash abroad or differences in credit cards: Don’t forget that many European countries require credit card PINs, and often don’t accept American Express.
5. Set Up Recurring Online Payments
At E-Complish, we’re really proud of the way online banking has come so far, and our part in developing payment processing software to make it quick and easy for everyone. If you’re still paying bills while you’re overseas, try to set up online payments to your providers, like insurance, telecommunications, medical, or rentals. And if you do need to make a payment when you’re away, double-check that the site you’re using is completely secure – and if using a shared computer, don’t save passwords! Schedule a consultation to learn more.
Good luck and bon voyage!