A lot of things are stressful when moving abroad to work or study, but figuring out the complexities of international banking and credit cards shouldn’t be one of them. In this second part of my series, Studying and Living Abroad, I’m sharing my experiences and tips for making the financial move overseas easy and as stress free as possible. Want to check out the whole series? Click here.
Firstly, there are some things to keep in mind. Unless you are planning a permanent move abroad, you’ll have to function under both U.S. and foreign banking systems simultaneously – it’s just not feasible to cut the cord from one or the other. Secondly, credit isn’t given as freely as in the U.S. almost everywhere else in the world. This means that you will likely have to function on a cash/debit system. Thirdly, you are moving to a new country and a new culture. Be prepared for some different attitudes toward money, banking, and cash and credit systems. And lastly, you may be moving a much more cash-based culture. Be open to how it works (and how to make it work for you, safely).
[Full disclaimer: I am not in any way being compensated for my reviews. I just honestly really like these products/services and want to share them with you.]
Here are my picks for keeping your finances (and you) sane while living abroad:
Best pick for U.S.-based banking
Schwab Bank High Yield Investor Checking Account
This is an amazing product. No service fee, no account minimum, and the best part: unlimited fee rebates from any ATM worldwide and no foreign transaction fees. This means that you can open this account (for free), fund it, and pull money out of your account worldwide, for no fees. You put dollars in, and you pull out any currency anywhere. For free.
And to make it even better: not only do they connect you immediately with customer service when you call (that’s right, no menu options!), but they offer an international collect number in case you need to call them overseas in an emergency. You can also deposit checks from anywhere with their free app.
I used this card all through my travels with no problems. I would notify them of travel ahead of time and I never had any ATM refuse my card, or had any fees on my account. Plus, whenever I call, I always reach a person right away. I can’t recommend them enough! (Don’t forget you can always use Google Voice to make U.S. phone calls when you are abroad.) Charles Schwab offers this checking service tied to a brokerage account, which you are under no obligation or pressure to use. Just leave that account unfunded; it’s not something to worry about.
And safety bonus: By not worrying about how much fees are (some banks have foreign transaction and ATM fees on per withdrawal basis), I could pull out small amounts of money, anytime, anywhere, and didn’t ever have too much cash on me at once.
Peace of mind: priceless.
Best pick for U.S.-based credit card
Chase Sapphire Preferred Credit Card
If you have good credit, the Chase Sapphire Preferred credit card is great choice. They offer 0% foreign transaction fees, you earn double points on travel and dining, and the phone is answered immediately by customer service. The card does have a $95 annual fee, but that is waived the first year. (You’ll have to do the math to decide if it’s worth it; keep in mind they often offer an initial bonus, often up to $500 in points.) The card also offers a free, 24/7 concierge service, which can help with anything from directions to booking travel.
I personally used this card while traveling, and really appreciated the 0% foreign transaction fee and the fact that my call was always answered by a real person. Additionally, I booked my airline tickets using this card – it’s always a good idea to use a credit card if you can – because doing so often insures your trip. Chase Sapphire Preferred offers travel delay insurance, lost baggage insurance, trip cancellation insurance, rental car insurance, roadside assistance, and lost luggage reimbursement – all for using their card for booking. While I really hope never to need any of these services, I’m glad that I have the option if the time comes.
Regrettably, I can’t tell you which local bank is best, but I can offer you this advice. Firstly, decide if you need a local account. If you have a debit card like Schwab’s or will only be overseas for a very short time, the headache of opening a local bank account may not be worth it.
If, however you have to open an account, here’s what you should know:
1. Direct debit is common
What’s this you may ask? Direct debit is the opposite of direct deposit – you know, how many people get their paychecks directly deposited into their bank accounts here. Instead of money going in, money goes directly out. This is used because it’s a guarantee that whomever is doing the direct debiting will get their money; they aren’t hoping you’ll pay your bill. My phone company, for example, direct debited my phone bill from account each month, so I had to have a local bank account.
2. It may be difficult to open an account
In some places you are required to to have proof of your student status or proof of a job in order to apply for an account. Others want a large upfront deposit or proof of residency. All of these can be difficult for someone who has recently uprooted their life and transplanted. Which leads me to my next piece of advice:
3. Talk to people
If you are studying abroad, speak to your university, especially the student life office. If you have just moved for a job or internship, speak to your coworkers, your supervisors, or human resources. Ask around for help. People will tell you which banks they trust (with their own money) and how to go about securing an account. Your best resource are those around you.
4. Consider a joint savings and checking (current) account
I was overseas for six months before my banker asked me why I had so much cash in my checking/current account. I was surprised, until she explained that it was common there to open a free savings account – which is inaccessible by ATM or by their debit card – and to put almost all of one’s funds in that, then transfer money freely back into the checking account whenever necessary. It serves as a big way to keep your cash protected in the case of a stolen ATM card or numbers. Keeping most of your cash out of reach reduces the risk.
5. Learn about chip and pin
Not all countries are on the chip and pin standard, but many are. Chip and pin simply means that your debit card has a chip inside and that you authorize purchases with a pin code (another anti-theft measure). Unlike in the U.S., it is rare to have a debit or credit card that is authorized by a signature. This means that you may have to insert your local card inside of card readers, and inform cashiers to ‘swipe’ American cards – something unusual for them. Additionally, be aware that it is also far less common to allow anyone to walk away with your debit or credit card (as many restaurant servers would in the U.S.), and they usually always bring a card reader directly to you, so that your card is always in your line of sight.
6. Consider using cash
I only make this recommendation if a) it’s common in your location and b) you can do it safely. If both are true, you might want to consider adopting a more cash-based system, rather than relying on debit or credit cards. I know in the U.S. it is becoming more an more common to not use any cash at all – in fact I almost never carry any – and instead use a debit card or credit card. Abroad, however, I’ve found it more common to withdraw cash from a debit account at the ATM and use that cash throughout your day, on everything from groceries to tuition fees.
7. Stay safe
No matter what system you ultimately choose, make it a safe one and have a backup option available. Don’t ever carry too much cash or show it off (it’s a real safety issue) and do your research about banking in your destination ahead of time. Also make sure that someone you trust has a copy of your records and customer service numbers in case any cards are stolen or accounts hacked.