If you are studying abroad in a country with most of your cash reserves in your home country, foreign currency transactions can be a huge concern. This is especially the case when you are studying in the USA, whose currency seems to get stronger each year. Here are a few tips to reduce the impact of currency conversions:
Spending money abroad using most credit or debit cards involves a transaction fee for currency conversion. For most American cards, this is 3%. These fees are similar/more in other countries. This may seem insignificant when you purchase everyday items. For example, the transaction fee is 30 cents for a $10 lunch. However, over a long trip, this will cost you a lot. A year long trip of $20000 will cost you an additional $600 in credit card fees. That’s the cost of a round trip from Chicago to Hawaii.
Get a Bank Account in the Country
If you are staying long term (1 year+), I recommend that you get a bank account, credit and debit card in the residing country. This will save you a lot of money in currency conversion and help build up your credit history.
If you are a foreign student in the USA, this is doubly important; as US credit cards and banks have more discounts/offers than in other areas of the world.
Online Money Transfers
If you own a foreign bank account in the country that you are staying in, very low currency conversion rates can be achieved using a company called “TransferWise”. TransferWise is a UK based company that achieves rates as low as 0.5% for transfers over 1000 British Pounds. They achieve this rate by being able to transfer money within banks in the same country instead of other countries.
Try to avoid cash currency conversions unless absolutely necessary. Most currency conversion places charge a significant percentage of the current exchange rate as a transaction fee. And this is double the case for airports, where the currency exchange fee is maximum.
Most airline credit cards have no foreign transaction fees. Every major credit card company and bank has a few credit cards with no foreign exchange fees. Most banks have at least one credit card with no foreign transaction fees. The Delta SkyMiles credit card is a good card, as it also allows you to get travel miles back every time you spend money.
Another good card is the City Thank You Premier Card by CitiBank.
Always carry around $50 worth of local currency, as there are shops/restaurants etc. in every corner of the globe that accept only cash. Again, most major ATM cards charge $2-$5 per withdrawal. The major banks that do not charge ATM fees are Charles Schwab and Capital One 360. This would be a good account to open up for a long distance trip.
Author, Budget Travel