Studying Abroad 101: Financial Matters

The cost of your trip will depend on how you  choose to live and which countries you visit. Expenses can be lowered by purchasing food at grocery stores instead of eating out at restaurants; staying at youth hostels; utilizing your ISIC for discounts on transportation and admissions; and traveling on trains at night. Keep in mind that you will inevitably spend more money the first few days in a country until you have begun to adapt to the local customs and monetary exchange rate. Once you have determined your travel budget, plan to live within it, and keep a $100 emergency reserve.

How to Take Money Abroad
You should take an ATM card for cash withdrawals. You can also take traveler’s checks, but they are not as widely used and may be difficult or costly to cash. Traveler’s checks, in U.S. and foreign currency, are sold by several agencies (e.g., American Express) and major banks throughout the United States, usually at the rate of one percent over the value of the checks you are buying. Be sure to keep the receipts for traveler’s checks separate from your checks, in case you need replacement checks. You will be reimbursed for lost or stolen checks if you report the loss within 24 hours. Buying a well-known brand of traveler’s checks will make cashing them easier.

It is a good idea to take $50-$100 in local currency with you to pay for initial expenses before you can get to a bank. (Local banks carry some foreign currencies or they can order it for you, which can take three to five days). It is also possible to exchange money at currency exchange bureaus at the airport. Do not exchange a lot of money at the airport, however, because the exchange rates are high. Also, most countries restrict how much cash you can bring in or out. Check with the appropriate embassy or consulate for any such requirements. See below for more details about money matters.

Dealing with Exchange Rates
Should you buy traveler’s checks in the foreign currency or exchange your dollars in the United States? Should you exchange money upon arrival or as you need it throughout the year? There is no simple answer to these questions, since exchange rates fluctuate in many countries.

The safest thing to do is to call several banks. Shop around. Larger banks may give you a better rate of exchange. Watch the exchange rate for a period of time and deal when it seems most advantageous. Remember that the rate quoted to you will be different for buying than for selling.

When traveling, before leaving a country , convert the loose change you have into bills; most places will not change coins. Plan to arrive in the next country during banking hours, if at all possible, since the exchange windows at rail stations usually have a lower, worse exchange rate than banks will give you.

Toward the end of your stay, exchange money only as necessary to avoid paying a fee to convert your funds back to dollars. You will want some dollars for your return trip home.

If You Need More Money

Advances, Check, Cashing
With the use of credit cards and computers, it is now much easier to transfer money from a home account and to cash personal checks. Credit cards are widely used in most countries. Visa and American Express are the most widely accepted worldwide and can be used in many large department stores, hotels, car rental agencies, and restaurants.

Contact your credit card company and ask for guidelines in relation to international money matters. The holder of an American Express card can cash personal checks at any foreign American Express office for up to $1000 every 21 days (the first $200 will be provided in local currency, the rest in American Express traveler’s checks, with the regular fees applying). Diners Club card holders have a limit of $500.

Any bank that honors your type of credit card will help you draw funds (in local currency) as a cash advance. These advances are often considered a loan and you can get an advance only up to your line of credit. When requesting an advance, remember that banks always require proper identification.

Note: your credit card bill will reflect the exchange rate on the day your credit card transaction was processed, which may be more or less than what you thought you were paying at the time of your purchase. Be aware that you are charged interest from the minute you withdraw money on credit cards so credit cards are best used for purchases, not cash withdrawals.

Bank Transfers/Drafts
If you think you might need to use bank transfers, or want to take your initial currency in the form of a bank draft, visit your bank in the United States before you leave and ask them for a list of their correspondent banks. Let them know who is authorized to initiate cable transfers to you. Once in your host country, you can contact your bank at home and receive the money, usually within 48 hours.

Be advised that you will probably have to pay the cabling charges both ways, in addition to a commission charged by your U.S. bank. Money can also be cabled from home through American Express; this type of transfer will take two to five days and the charge varies according to how much money is sent.

Alternatively, you can notify your home bank and request that a bank draft in your name be mailed to you (registered), again at a specific bank and location. Bank drafts may take up to three weeks to clear.

ATMs
Note that ATMs are easier to find than ever before. You may consider withdrawing funds from your American account via an ATM machine. The exchange rate is often better and the actual money is the currency of your host country. This is also useful when traveling and can save you charges for changing money. Be aware that there is a limit on the amount of money you can withdraw at any one time and charges vary according to bank and country. Because you are withdrawing your own money, you do not pay interest as you would with a credit card.

(taken from the UNCA Study Abroad Handbook)

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