Advantages of managing your study abroad expenses with a credit card

By Sridhar Keppurengan

Increasingly, parents view international education as a key to shaping their kids into global citizens. The experience is often transformative for students, as they are exposed to new cultures, values, ideas, languages, sports and music, and customs. In turn, they showcase their own cultural and linguistic traditions.

The recent Open Doors 2023 report shows that the US continues to be the top destination for international students, with over one million international students in 2022-23 academic year. Indian students account for a little over 25% of these enrolments and this number has grown by 35% compared to the previous year. A similar trend is observed in the United Kingdom as per statistics from the Immigration Statistics Report on students.

Living in a new country presents various challenges, and one of the primary ones is financial and money management. Different cost of living patterns and the use of a new currency can lead to constant mental rate conversions, which can be understandably overwhelming.

Therefore, it is important to have a single source of spending that allows for easy tracking and course correction, when necessary.

Here credit cards emerge as a top choice, considering their widespread acceptance in all the top student destination countries.

Not only do they facilitate currency conversions, but they also offer robust fraud protection and often come with strong reward programs or loyalty points that can be used for travel. However, amidst all these advantages, students will do well to diligently track their spending and make timely repayments.

The rapid growth of the international education sector, as highlighted in the earlier statistics, corresponds to a rapid adoption of credit cards by international students. Because these cards are accepted globally, a majority of daily, weekly, and even monthly expenses like rent can be managed without the need to carry large amounts of cash in person. As most parents will attest, carrying a lot of cash is never a good idea for students. Through prudent and structured credit card usage, students can better manage their finances while taking advantage of the rewards and discounts offered.

While getting an international network credit card is a practical way for students to manage their payments and finances, students will do well to look for credit cards that offer low fees and rewards tailored for student spending habits. As highlighted earlier, be sure to make timely payments to avoid high interest rates and penalties.

For students enrolled in long-term courses (two years or more), it is recommended that they also apply for a local credit card, by building a credit history. Most banks offer a temporary credit card against a deposit that students will have to use and pay for in a timely manner to establish a good payment history. After demonstrating responsible use, the local bank will typically offer a credit card with fees and terms linked to the credit history that has been established.

Until then, students can continue using the card issued by their bank in India. Another advantage of these cards is the RBI-mandated card controls. For the digitally-savvy student segment, effectively managing these controls (available on their mobile banking app or via secure bank chatbots) is crucial.

Students must remember to enable their cards for international point of sale (POS), contactless (Tap to pay), and e-Commerce transactions (such as ordering cabs, food, shopping online). Additionally, most banks offer the ability to set limits on each of these modes which can come in handy. Finally, having the ability to control these settings provides an added layer of protection. In case your card is stolen or lost, you can quickly deactivate its payment functions with just a click of a button, preventing any unauthorised usage.

While there are currency markup costs charged on the cards, they must remember that similar forex markup fees also apply (and are often even higher) when exchanging cash. since Further, these costs are partially offset by rewards programs, including cashback, travel miles, or other perks associated with the card.

A timely tip to add here is to pay in the currency of the destination country (USD in the US, pounds in the UK etc.), as merchants do offer payments in rupees, but there are fees associated with that convenience).

Studying abroad is a transformative journey, requiring you to adapt and learn. We hope this primer on the benefits of using a credit card smartly is your first step in using a safe, secure, and rewarding payment option that allows you to maximise the best of what an international education can offer in terms of learning, personal development, and most importantly, forging lifelong friendships.

(Author is Business Head, Cross Border payments, India & South Asia at Visa)