How should your kid handle money abroad?
The best solution will be a combo of a debit (for cash withdrawal) and credit card (for all other payments, collecting rewards on the way).
Here are considerations to back up my advice.
Say no to cash
Taking cash is not a wise option – you will lose on exchange rates, let alone security issues. It is proven by practice and research that the most cost effective ways to make purchases overseas is using a credit or debit card when all FX conversion issues are taken by the payment system (VISA, MasterCard, etc).
Be aware of fees
Pick a card (either debit or credit) with no international transaction fee. Otherwise, you will be charged an additional 2-3% of every transaction. Good examples of cards for students with no foreign fee are Capital One Journey Student Rewards, BankAmericard Students Travel Rewards.
| regular APR | |
- get 1% cash back on al purchases
no annual fee
student card
up to 1.25% cash back
| regular APR | |
- earn 1.5 points for every $1 in purchases
- get 20,000 points after spending $1000 in the first 3 months
- redeem points for travel as a statement credit towards travel expenses
no annual fee
1.5 points/$1
+20,000 points bonus
A full list of credit cards with no foreign transaction fee is here.
Sometimes you still need cash
Cash is still a must have for taxis, small purchases, tips, etc. Withdrawing cash from your credit card is costly – you pay a fee and there is no grace period for cash withdrawal. Find a debit card with low or no international ATM fee: CapitalOne360 and Charles Schwab debit cards charge no fee and reimburse the fees charged by overseas banks - ATM owners.
Using a card always pay in USD
Never use dynamic currency conversion (DCC). If you are asked if you’d like to pay in Euro or in dollars, always say “in dollar” – that will let the currency conversion be made on the side of payments system (VISA or MC) with favorable rates.
Don’t take Amex or Discover
AmEx, Discover cards have limited acceptance abroad, you are left with the choice of either VISA or MasterCard.
