Banking & Finances
You’ve worked hard to save for your study abroad program and want your money to go as far as possible.
While budgeting and discipline make up the foundation of any good financial plan, there are various ways to access and spend your money while abroad which may impact how far your money goes. The following explains these methods, as well as things to be aware of with each method. Depending on where you’re traveling, certain methods will be more favorable than others. It is important to speak with your program director to understand which methods are most appropriate for your program.
Understanding the Local Currency
It is worth the time to familiarize yourself with the local currency used in your study abroad destination. What is the currency? What are the denominations? What is the current exchange rate with the US dollar? Taking a few minutes to learn about the currency can make it easier to understand how much you are spending on your various purchases.
Debit Cards and ATMs
In many countries you can use your debit card at an ATM and withdraw cash in the local currency. Usually you will get a good exchange rate, but you need to be aware of the following fees which you may be assessed each time you withdraw money from an ATM in a foreign country:
- Your bank’s foreign ATM fee
- The foreign ATM’s fee
- Currency conversion fees
You should also be aware that your bank has a limit on the amount of money you can withdraw per day. We encourage you to contact your bank and inquire about their ATM fees, understand your daily withdraw limit and get a sense of how easy it will be to find an ATM where you will be. You may also want to inform your bank that you will traveling as some banks may become alarmed when they notice foreign activity on your account and may freeze your funds until they can ensure that it is you who is withdrawing the money.
Credit Cards Abroad
In many countries you can use major credit cards and they are a convenient way of paying for items. In addition, most credit cards offer the added security of not holding you liable for fraudulent charges.
Depending on your credit card you may be charged certain fees when using it abroad. It’s important to contact your credit card company and inquire about these fees. Some of the common fees include:
- A conversion fee for each purchase (usually 1-3% of the purchase price)
- Cash advance fee and interest rate (for withdrawing cash through an ATM)
It is recommended to inform your credit card company that you will be traveling as some companies may become alarmed when they notice foreign activity on your account and may freeze your card until they can ensure that it is you who is withdrawing the money.
In some countries, credit cards are used much less frequently than they are in the US. Ask your program director what types of businesses are likely to accept credit cards. You may also want to see how easy it would be for you to use your credit card abroad. Mastercard and Visa offer tools to help find ATM machines abroad that work with their system.
Chip and Pin Credit Cards
Countries in Europe use a Chip and Pin system for the credit and debit cards issued in their countries. It is a more secure way of paying with credit or debit cards. Instead of using your signature to verify payments, you will be asked to enter a four-digit Personal Identification Number (PIN) known only to you. You may encounter some challenges abroad trying to use a standard US credit card without a chip. It may be possible to get a chip and pin card from your current credit card company and it may be worth your time in asking depending on where you are going. Additional information about the system is available here.
Although not as widely accepted as credit or debit cards, travelers checks are still used and provide users with the following benefits:
- Travelers cheques may be refunded if lost or stolen
- Travelers cheques are not tied to your bank account or personal information, so your identity cannot be stolen.
- Traveler’s cheques can be purchased through many banks and through AAA for a small fee. Some banks overseas charge a fee for each check cashed so you may want to get them in larger denominations.
Western Union provides international service and allows you to receive money at a foreign bank or post office directly from your family in only a couple of days. MoneyGram is another way of wiring money. You can visit a MoneyGram agent location (such as some Wal-Marts) and send money to banks all over the world. You can also send money online.
Determining the amount of money you will need during your stay abroad can be difficult, especially if you are a first time traveler. Different countries have different standards of living based on their economies. First, try to find out the cost of living expenses in the country that you are visiting, such as transportation fares, rent, products, etc. Ask for advice from your program director and from students who have been through the same program or been in the same country.
Finally, it is recommended that you take 20% more than what you think you will need as it will help you in unexpected situations such as lost or stolen money or items. You should be prepared to cover unanticipated expenses that may come up during travel due to such incidents as canceled flights, missed flights connections, itinerary changes, etc.
For more on this topic and other important travel information, please review the Pre-Departure Handbook.