Using Credit Cards While Studying Abroad

Introduction

Studying abroad is one of the most exciting experiences you can have as a student. But if you want to make the most of your time away, managing your money wisely is just as important as learning the local language, turning in assignments on time, and keeping your passport safe.

And one of the best ways to manage your spending while you study abroad is by using a credit card.

Whether it’s a credit card with travel rewards or one geared to students, the right card can be convenient and help you build good financial habits that will last long after your trip.

Let’s see why credit cards matter when you study abroad, how you can choose the right one, and how you can use it to get the most out of your study abroad experience.

Why Credit Cards Matter When You Study Abroad

When you’re living in another country, a credit card can go a long way toward making everyday life run smoothly. From everyday expenses like train tickets to unexpected emergencies, having the right card in your wallet can save you time, money, and stress.

Convenience for international transactions

Carrying cash can be risky and inconvenient, especially while you adjust to bills in unfamiliar colors and sizes. The same goes if you’re hopping between different countries and using multiple currencies.

A credit card can simplify things. You can pay for meals, transportation, and souvenirs directly in local currency. Each card has different terms, but it’s worth checking if your credit card offers a better exchange rate than currency exchange kiosks. Just make sure your card doesn’t charge a foreign transaction fee.

Backup for emergency expenses

Luggage gets lost, flights get canceled and doctors get visited. When the unexpected happens, it seems like it’s always something urgent and expensive.

But a credit card can offer a safety net when an emergency comes up. Let’s say you’re low on physical cash and nowhere near an ATM. Well, you can lean on your credit card in that moment. Or if your budget is a bit tight, you can use your card and adjust your budget later on.

Many cards ­— especially credit cards with travel rewards — also offer travel protection benefits like an emergency assistance hotline, supplemental coverage for rental cars, or reimbursement for delayed baggage.

Building credit while gaining life experience

Studying abroad can lead to a lot of growth. Imagine coming back home and you’ve built your knowledge, skills and credit history.

When you use a credit card well while studying abroad, you’re also building your credit history. Consistent, on-time payments will appear on your credit reports, help your credit scores and ultimately show lenders that you’re a reliable borrower.

In the long run, building your credit will help you get better terms on future financial milestones, like getting a mortgage or auto loan.

Choosing the Right Credit Card for Studying Abroad

When picking a credit card to use overseas, it’s worth comparing features that can save you money or add valuable perks.

Something like a credit card with travel rewards can help with getting there, getting around once you’re already there, and then getting back home.

But there are other features you may want to look out for too.

No foreign transaction fees

Some credit cards can charge up to 3% on every purchase made in another currency. That adds up quickly when you’re abroad for months, so you’ll want to look for a card that waives foreign transaction fees. Many travel rewards cards do this, but it’s worth double checking.

Student credit cards vs. traditional cards

If you’re applying for your first credit card before studying abroad, a student card might be your best option. These are designed specifically for students with limited credit history, so they often have easier approval requirements and student-oriented perks. On the other hand, they also tend to come with lower credit limits.

But what if you’ve already developed a credit history? Maybe you’ve had a student card for a while or you’ve been an authorized user on a parent’s credit card. In this case, you may qualify for a traditional travel credit card which could offer better perks and rewards geared toward travel.

Rewards programs and benefits for travelers and students

Access to credit card rewards and perks can take your study abroad experience to the next level.

Rewards credit cards come in many varieties. And among those, there’s a good chance that a credit card with travel rewards will be a solid choice while you study abroad.

These usually earn higher rewards on travel-related spending, which can include airfare and transit expenses. Redeeming those rewards could cut costs when you travel around the region or go home for the holidays.

That said, you may still want to weigh your options. If everything else is the same, you might appreciate the simplicity of a card that earns fixed-rate cash back rewards on everything.

As far as card benefits go, look for travel-oriented perks like travel insurance for cancellations or delays, rental car coverage, lost luggage reimbursement and emergency travel assistance.

There’s enough going on when you’re in school and in another country, so these perks can give you some peace of mind.

How To Use Your Credit Card Responsibly While Abroad

Wherever you go, a credit card can be a powerful tool if used right. Developing responsible spending habits while you’re overseas can set you up for future success.

Budgeting your monthly spending

While you plan out your trip, it’s a good idea to research your expected costs and then set a budget to avoid overspending and debt.

According to the University of Louisville, the average semester abroad costs between $7,000 and $15,000. But keep in mind, costs can vary, especially if you have financial aid or use a third-party study abroad program that includes housing.

Here are some sample costs using some of Go Overseas’ examples for studying abroad in France:

• Tuition: $4,000 per semester

• Round-trip airfare: $800

• Housing: $700 per month

• Food and groceries: $325 per month

• Transportation: $70 per month

That’s $1,095 in monthly living costs, not including tuition and airfare which may have been paid earlier.

Once you know your numbers and set your budget, you’ll know exactly how much you can safely spend while overseas.

Only using credit for planned or essential purchases

It’s easy to swipe your card for an impromptu weekend trip or an impulsive purchase, but these splurges can add up.

However, strictly using your card for planned or essential expenses, like flights home, school supplies, transit passes and groceries, can help you avoid falling into debt. Even if an emergency comes up and you need to use your card, you’re still in a better place than if you’d been overspending.

Paying on time to avoid fees and interest

Ideally, you can pay your full credit card balance each month to avoid interest charges. But you should at least make your card’s minimum payment on time, every time.

Payment history is the most important factor impacting your credit score, so making timely payments can really help you out. On the flip side, late payments can damage your score while also triggering fees and interest charges.

Fortunately, most card issuers offer AutoPay, so you can automatically schedule your credit card payment and stay on track.

Setting spending alerts and monitoring accounts regularly

Budgeting and making plans are great first steps, but you still need to actively watch your finances. It’s a good idea to check your statements regularly for errors or unexpected activity.

Many banks also offer mobile alerts or app notifications that can help you keep track of spending, upcoming due dates, and suspicious charges.

Bottom Line

Studying abroad is an opportunity to explore, learn, and grow. And that’s not just limited to academics and new cultures.

Learning to manage your finances can be a part of that experience too, and with the right card and knowledge, you can build your credit history and a stronger financial future.