Getting ready to go abroad this spring? Or perhaps you’re already in a new country! Either way, it’s important to manage your finances while traveling abroad. Today on GoAbroad, we bring you a guest post from NerdWallet, with five essential pieces of advice to better manage your money while abroad!
In all the excitement leading up to and during your time abroad, one aspect of the trip can be easily overlooked: how to manage your money while in a foreign country. No matter how much you’ve been able to save up in advance, there will still be essential skills to learn and options to consider when it comes to your personal finances. These 5 tips should help get you started:
Choose the Right Bank
Unless you’ll be spending a year or more in your destination country, you may be more comfortable working with an American bank. However, before leaving consider the fact that your current bank might not be the most cost-effective option while traveling internationally.
Most banks and credit unions charge some sort of foreign transaction fees for debit card usage in another country. Usually, this amounts to a 1%-3% charge for using a card to make a purchase. International ATM withdrawals are another matter. Some banks charge up to $5 for each withdrawal, not to mention the surcharge that the machine itself may charge.
One way to limit fees is to open an account with Bank of America. As part of the Global ATM Alliance, BofA customers may use their debit card to withdraw from ATMs at participating banks, incurring just a 1% currency conversion fee. Other Alliance banks include Barclays in the U.K., Deutsche Bank in Germany, Westpac Bank in Australia and more.
You can also avoid excessive foreign fees by opening an account with a local credit union or online bank like ING Direct (soon to be Capital One 360). These types of institutions have much lower fees on average and ING Direct accounts have no foreign fees whatsoever.
Understand the Exchange Rate
It can be stressful and difficult to attempt price conversions in your head each time you buy lunch. Instead, you should strive to internalize the value of your local currency.
Try memorizing the approximate local currency value of critical US dollar amounts (for example $10, $20 or $50) for quick estimates over the first few days. Afterwards, focus more on comparing prices in your new location to determine whether an item is expensive or not.
Keep Your Money Safe
Cash can be a definite necessity in a foreign country. For one, merchants accepting credit or debit may not be as common as in the United States. It can also be a handy way to keep track of how much you are spending – a shrinking wallet is a much better deterrent of excessive buying than are the plastic cards it holds. However, cash spending comes at the expense of additional safety concerns. To avoid a major blow in the case of theft or a lost purse, carry only enough cash for the day or evening. Keep the rest in a safe location at your place or residence (or in a locker if you’re staying in a hostel).
For those that prefer using cards, know that if your card is lost or stolen, you’ll be liable for up to $50 in any fraudulent charges. For ATM and debit cards however, this liability rises to $500 if reported more than 2 business days following the incident. Be especially careful with prepaid debit cards, for which you’ll likely be on the hook for the entire balance.
Bring a Spare
Even if you’ve followed all the rules, warned the bank of your upcoming travels and kept a close eye on your wallet, things could still take a turn for the worst while abroad. If your card is lost or your account frozen by the bank, you’ll find yourself adrift without ready access to cash, a harrowing position to be in while traveling in a foreign country.
Asking friends for help or contacting parents to wire you money can be a short-term solution, but why not avoid that hassle by bringing a back-up option of your own? Ideally, it would be a second credit card, kept in stored away for safety until needed in an emergency.
Get a Job
Yes, studying abroad should be about the experience of international study, travel, and forging new relationships. Most students might not want to spend their precious little time working. However, the right part-time gig could be more fun than you’d expect, and you’ll be able to meet even more new people or practice a foreign language. Keep an eye out for families seeking English tutors for their children or even a bartending job (as long as it doesn’t interfere with your studies!).
John Gower is a writer for personal finance website NerdWallet, helping consumers find the best savings accounts, credit cards and more. John has studied abroad in Valladolid, Spain and traveled throughout Europe.