Planning Your Finances While Studying Abroad

Transcription

1 usbank.com/student financialgenius.usbank.com Course objectives learn about: Preparing for Your Trip Understanding Different Payment Options Answers to Common Questions Planning Your Finances While Studying Abroad

2 Index Banking ATM/Check Cards Prepaid Cards Credit Cards Traveler s Checks vs. Cash , 5 Currency Exchange Common Questions About Banking While Abroad , 6 Sources Notes

3 Overview Studying abroad costs more than just program costs and airfare. For example, you might travel to different countries and cities. And don t forget social activities, eating out, museums, and so on. With so many things to pay for you should ask yourself: Should I use my bank account from home or should I open an account with a foreign bank? Should I carry cash or use credit cards? What about traveler s checks vs. a traveler check card? What is the exchange rate of my host country? This guide is designed to help you answer these questions and teach you about banking, traveler s checks, credit cards and exchange rates during your time abroad. Banking A bank account is essential when you go abroad. At minimum you need to have an account from home and depending on where you decide to study, you may want to consider opening an account in your host country too. The benefits to having a bank account include: Keeping your money in a bank account is safer than carrying cash. Family or friends can deposit money into your account if your cash runs low or in an emergency. It s easier for you to keep track of your spending. Before you leave Notify your bank of your travel plans. Otherwise the unfamiliar spending patterns might cause them to suspect that the card is being used fraudulently and delay your approvals. Sign up for Internet Banking and choose paperless bank statements so you can easily access them from anywhere (this helps prevent fraud). Check your daily withdrawal limit and ask your bank to increase it if it is too low for your needs while traveling. Take with you only the ATM/Check/Credit cards you really need. Keep the rest at home in a secure location. Get some cash in the currency of your first destination before you leave the U.S. if possible. It will give you the money for a taxi or bus ride to a hostel or hotel and save you from the often exorbitant rates of airport exchange services. U.S. banks abroad Some U.S. based banks offer branches and ATMs abroad, while others have affiliations with foreign banks where customers can withdraw money from affiliated foreign bank ATMs without paying a fee. An account with either will save you money by avoiding fees for ATM withdrawals. Most U.S. based banks offer international banking services to customers. Study Abroad page 1

4 Opening an account with a foreign bank If you choose to open an account in your host country, wait until you arrive. In other words, open the account in person, not online. Shop around and find the bank that meets your needs. ATM/Check Cards Your ATM/Check Card whether from a U.S. based bank or a foreign one represents the best way to withdraw money while abroad. The benefit to using an ATM/Check Card are: ATM/Check Cards are convenient and safe. If your card is lost or stolen, it will be replaced, usually without cost to you. You won t have to exchange money each time you visit a new country. ATM/Check Card tips Most ATM/Check Cards require a four-digit PIN (Personal Identification Number). Make sure you know your PIN before you leave. ATM cash withdrawals abroad come in local currency. Most ATMs abroad include English instructions. ATM/Check Cards with Visa or MasterCard logos work at merchants anywhere in the world where Visa or MasterCard are accepted. Foreign ATM fees will be assessed by the bank and possibly by ATM owner. Foreign transaction fees will apply. Thousands of ATMs worldwide are compatible with Cirrus (MasterCard) & Plus (Visa) ATM/Check cards. Do not rely on ATMs for all your foreign cash; a broken ATM could eat your card, leaving you without a way to get money. Use the following sites to locate ATMs in your host country: Visa ATM Worldwide Locator MasterCard ATM Worldwide Locator Prepaid Cards Visa and MasterCard prepaid products are an innovative, efficient alternative to cash or travelers checks. Funds are easy to access while safely stored on a card account. There s no risk of credit card debt because the prepaid cardholder can only access the amount preloaded to the card. These cards are also safer than cash, because they can be replaced if lost or stolen. Study Abroad page 2

5 Credit Cards Credit cards are becoming increasingly common in developing nations as well. Credit cards can be an invaluable financial tool abroad when used wisely. Beyond giving you more spending power and favorable exchange rates, credit cards can be a valuable asset during a financial emergency. Foreign transaction fees will apply. Refer to Cardholder agreement for more information. Emergency cash If you need instant access to cash, credit cards do the trick (see the note below). If you have an American Express card you can visit more than 2,200 American Express locations for instant access to cash, traveler s checks and other travel services. Find an American Express location in your host country. Visa and MasterCard also offer emergency assistance and travel services for card holders. American Express Visa MasterCard Note: Cash withdrawals usually carry a higher interest rate than regular transactions. Consult your credit card company about interest rates for cash withdrawals. ID required Credit card purchases abroad frequently require a proper ID. Many merchants, in fact, will require you to show your passport to use your credit card. Study Abroad page 3

6 Traveler s Checks vs. Cash Carrying some cash is always a good idea when traveling. Cash is usually easy to exchange into the local currency, and the exchange rates are usually a little better for cash compared to traveler s checks. Even better, some countries accept the U.S. dollar along with the local currency. (Do some research first to see if this applies to the country where you are going to study.) The downside to cash: if it s lost or stolen you are out of luck. Get foreign currency before you leave Many U.S. banks offer currency exchange services available for before you leave. This way, you will already have the local currency of your host country when you arrive. Traveler s checks offer security You can get traveler s checks in various denominations and currencies. Exchange traveler s checks at airports, exchange houses and most banks when you get to your host country. Most banks and credit unions offer traveler s checks You can also order travelers checks from: American Express Visa Note: Traveler s checks, compared to cash, offer more security if they are lost or stolen. To replace your checks, you will need the serial numbers, so keep your check receipt with the serial number separate from your actual checks. Travel cards: The best of both worlds Travel cards offer another alternative. Travel cards work just like an ATM/Check Card but offer the protection of traveler s checks. Purchase travel cards before you leave (see links below) Use travel cards just like an ATM/Check Card at merchants with American Express, MasterCard or Visa logos Withdraw money from ATMs just like with an ATM card Best of all, travel cards carry many of the protections that traveler s checks do. Learn more about the benefits of travel cards: American Express Cheque Card Visa TravelMoney MasterCard Prepaid Study Abroad page 4

7 Currency Exchange Whether you re in South Africa using Rand, in South Korea spending Won or in the Czech Republic using Koruna, your concept of money has to change when you go abroad. The currency exchange rate will be very important, especially when you exchange U.S. cash or traveler s checks for local currency in your host country. Be aware of the currency so you know how much money you re spending Full service banks usually offer the best exchange rates Exchange houses at airports and in tourist areas offer the worst exchange rates Here are a few websites that show the latest currency exchange rates Common Questions about Banking while Abroad How can my parents deposit money into my account while I m studying abroad? Your parents can deposit money into your bank account in several ways: 1. Make deposits at the bank. Your parents can make a deposit in person at any convenient branch for your bank. 2. Make deposits at the ATM. If your parents have an ATM card linked to your account, they can make deposits at the ATM. Remember, when deposits are made into an ATM some of the funds may be held for an additional amount of time. 3. Make deposits online. If both you and your parents are customers of the same bank, they can transfer money into your account online using Internet Banking. If your parent does not have an account at the same bank as you, they MAY be able to use their bank s online bill payment service to send funds to you. 4. Make a wire transfer into your account. Your parents can wire money from their personal bank account to your account. Should I bring a Prepaid Card while traveling abroad? Yes. Your ATM card will give you access to cash where the ATM is compatible with the same network. Thousands of ATMs worldwide are compatible with Cirrus (MasterCard) & Plus (Visa) ATM/Check cards. And since ATMs dispense cash in the local currency, an ATM card is ideal for traveling in foreign countries. Study Abroad page 5

8 Should I use my credit card when I travel? Yes. Using your credit card can be more valuable than using cash because you may potentially get a better exchange rate than changing money to spend yourself. Therefore, use your credit card when you can. Additionally, your credit card company can sometimes credit back disputed charges, so you ll have that added security if any issues arise. Most importantly, you won t have to risk your safety by carrying and displaying large amounts of cash. And if you lose your card, most credit cards have a low maximum liability limit if you quickly report the card as lost. Should I use my ATM card while traveling? Yes. Your ATM card will give you access to cash where the ATM is compatible with the same network. Thousands of ATMs worldwide are compatible with Cirrus (MasterCard) & Plus (Visa) ATM/Check cards. And since ATMs dispense cash in the local currency, an ATM card is ideal for traveling in foreign countries. Should I bring traveler s checks? Traveler s checks may be a good idea even if you plan to use a credit card. They can be used as a back-up if your credit card cannot be used or is stolen. However, traveler s checks are not as widely accepted as cash or credit cards. Find out if your particular brand of traveler s checks is accepted in the country you ll be visiting. Also find out how widely they are accepted within the countries you ll be visiting. Take the same precautions to protect your traveler s checks as you would to protect your cash. Know the company s loss, replacement and refund policies. Why should I enroll in Internet Banking? It is highly advised that you enroll in Internet Banking before you leave for your travels. Internet Banking provides the most up-to-date account information, and allows you to view your checking, savings and credit card accounts online 24/7. You can monitor your accounts online for fraudulent activity, and transfer money immediately between accounts (i.e., savings to checking, checking to credit card, etc). If you will be responsible for bills during your study abroad, you may want to use Internet Bill Pay. Paying bills online is quicker, cheaper and safer than sending through the mail or doing over the phone. What if My Bank Card is Lost or Stolen? If your card is lost or stolen, call your bank or card provider to cancel the card immediately. You may want to make photocopies of the front and back of each card you carry, so if it s lost or stolen, you ll have the important information at your fingertips. You will need to order another card, and if possible, have it shipped to your overseas address. Remember that ATM and Check Cards offer limited protection against unauthorized use, much like a credit card. Your card provider will have a reporting policy which will require you to report your card lost or stolen or to report unauthorized use within a certain number of days. If you travel with an ATM or Check Card, it is advisable that you have only the money you plan to spend on your trip in your account. Sources Information was adapted from the following sources: DiversityAbroad.com: financial_aid/money_management.php "Travel Smart", a brochure published by American Express and Lonely Planet Study Abroad page 6

9 Notes Study Abroad page 7