Plan to study abroad one semester? – then you are at the right place. One of the financial concerns that students have with studying abroad is overpaying for currency exchange fees that we do not face when in the United States. First of all, what is a foreign transaction fee – it is a fee charged by a credit card company/bank for EVERY transaction made in a country outside of the US. These fees might vary depending on the bank from 1 – 5% of the purchase amount. It might not seem like much, but adding up these fees throughout the whole time one is abroad might become very significant. For example, if one was to spend around $10,000 for food, clothes, etc for about six months, 5% of it would amount to $500!
So, what can you actually do to avoid these fees? It appears that in the modern world all you have to do is use the right credit card, as most US Banks, as well as companies like Amex, Visa, and Mastercard, have international agreements that will let you avoid these fees. There are couple caveats that you need to consider:
- Do your homework on the country/region that you are going. Some countries might only accept Mastercard cards, others might not accept Amex, etc.
- There are several credit cards that let you avoid any foreign transaction fees, the only obstacle is you need to apply for them and get approved. For on tips how to get approved read our article about credit cards. Here is the list of some of these travel cards:
- Bank of America Travel Rewards
- Capital One SavorOne Cash Rewards
- Chase Sapphire Preferred
- Discover it Cash Back/Student Card
- Capital One Quick Silver
It is important to note, don’t fall in love swiping and spending on cards and remember to stay disciplined with your spending. Make sure to never spend more than you can afford and make sure to pay back on time in order to avoid any kind of interest. For more information, it is recommended to contact your bank/financial institution and schedule a free appointment with your banker who can give you many more details about the different terms and conditions that cards have. Here are some helpful links that we would recommend visiting to get to know more about foreign transaction fees: