Best Banking Solutions for Students Studying Abroad

Posted on 9th June 2019
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student travelingIf you’re studying or doing an internship abroad, you need the right checking account, because you can do without unnecessary fees. Here we explain what a checking account abroad must be able to do and what possibilities you have.

Today, a semester abroad is no longer just a matter of good form, but has long since become an obligation in many courses of study. And all sorts of things need to be taken into account:

You need accommodation, insurance, vaccinations if necessary. And also a student current account, which is fit for the foreign assignment, because it isn’t quite easy and often not possible to open an account at a bank in the respective country, if you are not a citizen.

However, now there are modern banking solutions by FinTech companies solving those problems. You can get an account with a handy smartphone bank, or virtual bank, that will save you a lot of money while you stay abroad. More on that further below.

Current Account Abroad

What A Bank Account In Foreign Country Must Be Able To Do

If you expect salaries or stipends that will be paid to you weekly or monthly, then it can of course make sense to have a bank account in the other country. For sure there are local banks where you could go to and get a bank account for the time being there. But you might need to ask locals at which bank this is best to get, maybe somebody can pass you the contact information of a certain bank advisor you can go to.

It’s important that the current account abroad functions largely free of charge. This means that you can pay cashless with the Girocard or (and this is the rule) with your credit card, whether Mastercard or VISA, and you can also withdraw cash at the ATM without paying unnecessary fees, so ideally this should work free of charge.

In the best case you can even withdraw foreign currency for free, but this is rare with traditional banks. You will also need to be able to do your banking when there is no branch of your house bank around the corner in the other country. So online banking must be possible everywhere. But that’s normal nowadays anyway, so there shouldn’t be any problems here.

However, as mentioned now there are way easier ways online to get a bank account in a foreign country, or something that is kind of a bank account and will serve your needs. It’s possible to enjoy low fees for withdrawals abroad, reasonable exchange rates etc. with the right banking solution. Here were are talking about virtual banks, which we are discussing further below.

A tip: Get the ISIC International Student Card, with which you get special student discounts in many countries.

Credit Card For Students Abroad

What You Have To Pay Attention To

Of course, a credit card is often directly linked to the current account you are using. And you might be used to use this card a lot at home for everyday spendings. Nevertheless, you should take another look at it when it comes to traveling: Check how much fees your credit card charges when withdrawing and paying abroad.

Important: In many cases a distinction is made between European and non-European countries! Therefore, if you are considering a change of account/credit card, you should also make your choice according to where your trip is going.

Beware Of Fees From AMT Operators And Foreign Exchange Rates

ATM withdrawal abroadEven if the account is initially cheap and there is a credit card on top of it, you have to stay alert and take a close look at the details of the offers. The decisive factor is how the banks withdraw the money or calculate the payment abroad. The individual fees banks charge on top of the real exchange rate at withdrawals abroad fluctuates greatly between different banks and can, for example, also differ between EU foreign countries and non-European foreign countries.

Another cost factor that needs to be considered is the fee model used by various ATM operators. Because not only banks want to collect fees, also the operators of certain ATMs sometimes want money for withdrawing money from them. The banking institutions do not necessarily have much influence on this. In order to avoid these charges as far as possible, there are different approaches.

  • 1. check the conditions of your own credit card before you start your journey, when do charges apply?
  • 2. In non-Euro countries, you should definitely do without the conversion into Euros at the local machine, as fees are added here.
  • 3. An account which generally allows free withdrawals abroad, also makes sense.
  • 4. Check whether there are banks abroad where you can withdraw money free of charge with your own EC card.

Global ATM Alliance allows for withdrawals abroad without international ATM access fees. So if you have a bank account with one of the following banks, you can make credit card withdrawals fee-free at all of the partners wherever you are:

  • Bank of America
  • Deutsche Bank
  • Barclays
  • BNP Paribas
  • Scotiabank
  • Banca Nazionale del Lavoro
  • Westpac

Know The Actual Exchange Rates!

Of course you can only know if you’re getting a good deal when exchanging currencies when knowing the actual exchange rate which can be checked on Oanda.com, for instance. Make sure to check the rate on the day you want to make a money exchange, since rates can change.

Forex is not as volatile as cryptocurrencies, of course, but there is still movement in price on a daily base. Just think of the Argentinian Peso, that happened to crash 80% against the US dollar only within 2 years (2015 to 2017). Within this time there were enormous price drops, which happened only within a day.

Avoid Cash Exchange Counters

With money exchange counters you usually get a rather bad exchange rate. The exchange rates they offer are usually up to several percent away from the real exchange rate. So it’s better not to use these locations, because there are always better digital deals if you have the right setup before you start your journey. Just compare the rates with Oanda when you pass such a cash exchange counter, then you’ll see what I mean.

Virtual Banks For Students Studying Abroad

virtual bank appVirtual banking solutions try to fix the problems we face with traditional banks, especially in our modern world of globalization when traveling is not something special anymore. As mentioned, there are banks that don’t charge fees on withdrawals, however they often offer poor conversion fees in the form of a 3 to 4 % spread on foreign exchange (e.g. HSBC or Citybank). And that is a lot.

This is different with virtual banks. Travelers and people spending more time abroad than usual are exactly target group. But also freelancers or companies who get paid internationally and who therefore need good exchange rates and low or no fees when it comes to international money transfers.

ATM fees with traditional banks are typically around 3%, or a minimum of $3, depending on the amount you cash out. The bank automatically charge the higher amount. So if you withdraw $20, they will charge you $3, because 3% of $20 would only be $0.6. If you take $200 they will charge 3%, which is $6, which obviously more than $3. Good to be a bank, right?

However, the virtual banks now compete with them, which might make the traditional bank’s life harder. They not only offer better fees but also have great apps helping their customers to bank smarter. The virtual banking apps are really cool, easy to use, give an overview of all your spendings at a glance and they come with a debit card you can use for cash withdrawals abroad.

Here are the services you should know about:

N26

N26 is a direct bank from Germany offering its services throughout Europe and now even in the USA. The company offers a great practical mobile banking solution that can also be used for stays abroad. Because the card use is very favorable, there are no extra fees and a good exchange rate.

In addition, N26 offers integrated health insurance and other extra services (see table). As a European or US American student, you can simply get an account with N26 online and use it to receive, send and withdraw money abroad. Read more in our N26 review.

Revolut

Revolut is a London-based virtual bank specialising in the needs of travellers. It also allows cheap cross-border payments. At the heart of Revolut is its debit card (MasterCard), which can be used to make digital payments anywhere, but its core benefits also include low-cost withdrawals abroad. Unfortunately, only students (or resident citizens) from Europe can currently register with Revolut. Learn more on our Revolut Review.

Monzo

Monzo is another FinTech company in this category which calls itself the bank of the future. The UK based virtual bank, which also specializes in long-term travel, does not charge any credit card fees and doesn’t put an additional charge on top of the foreign exchange rate.

Monzo serves customers from EU countries and has recently expanded to the USA. So student from the US can also signup for Monzo to use the service in Europe, for instance. Of course, cross-border payments are among the virtual bank’s key services.

Monzo even offers overdraft and loans and their app allows for money management including tracking your spendings at a glance and more. Students from Europe and the USA can get a Monzo account.

Transferwise

Transferwise is a FinTech company offering an online account especially for transferring and receiving money internationally and for making payments across borders. This also includes a debit card with which you can withdraw money abroad. Actually Transferwise is the transfer service behind the other services mentioned above, when it comes to cross border bank transfers.

With Transferwise, students studying abroad for one year can pay their rent and other regular costs, but also receive salary payments or scholarship payments. The Transferwise Borderless Account works on the basis of real bank accounts. So you can give others real bank account information to which they can transfer.