By Kelly Cutchin
Studying abroad can be an exciting adventure, but arranging travel, collecting documents, and relocating your necessities can quickly turn that adventure into a never-ending nightmare. Now add in the extra stress of planning your finances and you’re in for a challenge unlike any other.
As a student studying abroad, your finances are likely already a bit drained which means saving money on foreign exchange should be top of mind, especially if it’s your first time overseas. Whether you’re studying abroad for a year or maybe just doing a quick semester trip, here are the top tips to keep in mind if you want to save a few bucks (and more) while abroad.
Pay Attention to Exchange Rates
Before you embark on any international trip, make sure you pay attention to the current exchange rates for your destination country. Currency conversion services are offered by a number of different organizations so comparing the rates among the various banks, payment providers, and currency converters will allow you to get the most value for your money.
Many people wait until they arrive at their destination or until they need more money to complete a currency exchange. But when you do this, you lose any and all control over your conversion, accepting the on-the-minute rate, even if it’s a bad one.
Understand Fee, Network, and Transaction Costs
When withdrawing money in your home country, there are likely no associated transaction fees. But for transactions done abroad, a simple ATM fee isn’t the only added cost you can expect. Service fees, withdrawal fees, and even foreign currency fees are all extra costs you should be prepared to pay if you’re hoping to pull out money from your bank while in your destination country.
While it’s easy to simply pick the closest ATM available when you’re out and about, doing so may cost you even more than the expected fees, especially if you choose one that is outside of your bank’s ATM network. Major banks across the United States are almost always part of an alliance which means that, as long as you use your ATM card at a foreign bank inside that network alliance, you may be able to avoid the international ATM fees altogether.
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Consider a Multi-Currency Bank Account
Many travelers wait until they’ve already arrived at their destination to get cash, but doing so, as we’ve mentioned, puts you at the mercy of on-the-spot exchange rates and hefty transaction fees. That’s why getting your foreign currency before you leave the country should be a major priority as you prepare for your adventure.
That being said, if you prefer to use a card when you travel then a multi-currency account may be the option for you. With multicurrency accounts, you can avoid the typical foreign exchange fees by managing funds and currency transfers through one online account. Some multicurrency account providers can even help you set and target exchange rates.
Always Pay in Local Currency
Whether you’re using cash, an ATM card, or a multicurrency account, paying in the local currency of your destination country is almost always the way to go. Vendors often build a premium into the price of their goods when paid with currency outside of their country. While doing this allows them to offset any expected bank conversion fees and possible exchange rate fluctuations, it also increases the amount you’re ultimately paying.
It’s also important to note that a merchant’s bank often has a much wider foreign exchange spread compared to exchanging the currency with your own bank or payment provider, again leading to a much higher cost on your side.
The Bottom Line
While studying abroad is undoubtedly the chance of a lifetime for many students, few truly understand the time, research, and preparation it takes to uproot your life and transfer overseas – even for the short term.
Before you arrive at your destination, make sure you do your due diligence on both the current market movements and the best exchange rate options available to you. Taking the time to understand how you can best finance your way through a study abroad excursion and, learning to avoid some major FX fees, will save you the most money in the long run.
About the author: Kelly Cutchin
In 2006 Kelly joined the Moneycorp Team based out of their Orlando Florida Office and has since then held various positions within the Moneycorp group. In December 2012, she took on the role of Country Manager for Moneycorp’s USA operations where she leads a team of foreign exchange experts who work very closely with their global offices. Educating professionals on the importance of understanding the foreign exchange market and helping Realtors promote their businesses internationally are a few of Kelly’s initiatives and passions. Learn more about Kelly and her team by visiting Moneycorp Americas here.
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