By George Zachariah
Studying abroad is an enriching experience, but it often comes with a hefty price tag. One aspect of international education that can significantly impact your expenses is transferring large amounts of money abroad for tuition fees, living expenses, and other costs.
Transferring money internationally, especially for students, can be an expensive endeavour. Hidden fees, unfavourable exchange rates, and transfer charges can eat into the funds for education and living expenses.
Choose the Right Payment Method
Research shows that using banks for international transfers can cost you significantly more than other methods. According to the World Bank, the average cost of sending Rs 200 through a bank was 10.75% in Q3 2020. Instead, consider using online money transfer services. They often offer better exchange rates and lower fees.
Compare Transfer Services
Research is key to saving money on international transfers. Platforms like ExTravelMoney.com, Unimoni, and Wise.com offer transparent fee structures and competitive exchange rates.
Timing Matters
Exchange rates fluctuate daily, so timing your transfer can make a substantial difference. Historical data from XE shows that currency exchange rates can vary by as much as 5% within a month. Use currency conversion tools to track trends and make transfers when the rates are favourable.
Avoid High Fees
Hidden fees can add up quickly. A study by NerdWallet found that many banks charge up to 5% in fees for international transfers. Ensure you understand the fee structure of your chosen service and opt for those with lower or no fees.
Verify Exchange Rate Margins
Providers often add a margin on top of the mid-market exchange rate. A 1-2% difference may seem insignificant, but it can result in substantial savings or losses. Compare providers to find the lowest margins.
Explore Student-Friendly Options
Many institutions offer special programs for students, such as reduced fees or favourable exchange rates. Check with your university’s financial services department to see if they have any recommended partners.
Understanding TCS Implications
For Indian students heading abroad for studies, comprehending the Tax Collected at Source (TCS) on money transfers is vital. The Indian government applies TCS on such remittances, especially when the foreign exchange usage exceeds Rs 7 lakh in a financial year.
However, there’s a silver lining: if the funds stem from a study loan, the TCS rate is lowered to 0.5%. Being aware of this not only helps students manage their finances effectively but also ensures compliance with tax regulations, avoiding any unforeseen financial setbacks.
Conclusion
Saving on international money transfers as a student is about more than just finding the cheapest option. It’s about making informed decisions based on data and research. By comparing services, timing your transfers, and being aware of hidden fees, you can ensure that more of your hard-earned money goes towards your education and living expenses rather than lining the pockets of financial institutions. Stay vigilant, and your financial future as a student abroad will be more secure and cost-effective.
(Author is CEO at ExTravelMoney.com)