Here are a few important tips that can help one save money on foreign exchange while studying abroad.
With the rise in population comprising the middle-income segment over the years, India is witnessing a huge outflux of students looking to seek quality education and exposure abroad. While it’s undoubtedly a transformative experience for the students, who mostly prefer to go abroad for their post-graduation or PhD, one fact that you can’t ignore is the hefty price tag that comes with it. To add to it, high currency exchange rate for their fee and personal expenses further adds to the already huge budget. Here are a few important tips that can help one save money on foreign exchange while studying abroad:
1. Compare rates and purchase forex locally
One of the most basic pointers that you must keep in mind before flying abroad is that buying foreign currency in India as compared to exchanging currency abroad or using a debit/credit card is a better option. Make sure you compare and look for competitive forex rates locally because the difference between one currency exchange company and another can easily be as high as 6% depending on the currency that you’re interested in and the city you’re in. To save time and avoid stress related with rate haggling, you can now use one of many online forex marketplaces, which aggregate rates from multiple currency exchange vendors and banks. Online forex marketplaces are competitive platforms where currency exchange vendors have to compete with each other to offer the best rate in order to acquire more business and therefore they offer the best rate to customers.
2. Use a Forex card while staying abroad
A wise choice for any student would be to use a prepaid forex card abroad instead of debit or credit card for managing day to day expenses. Forex cards are not just more economical than rupee cards but also than other forex products too. They offer added advantage of being able to check and compare rates with other forex products and inter-bank rates. Certain debit cards promise zero margin, but the underlying rates may not be inter-bank rates and hence customers may end up paying lot more than interbank rates. Forex cards are accepted almost everywhere where Visa/ Mastercard is accepted. There are no foreign transaction fees on these cards, they are pin secured and come with an insurance cover too. The best part is that they can be topped up when you are abroad and therefore you can use it for your day to day expenses. The table below will help you understand how much you lose by using the given options as compared to prepaid forex card:
The key is to watch out for various charges such as ATM withdrawal charges, replacement charges, balance inquiry charges and any other hidden charges as well. Therefore, choose a forex card carefully according to your requirement and usage pattern.
3. Compare remittance rates and charges
When you go to study overseas, you will require money at timely intervals for your tuition fees. Since tuition fees is a considerable amount of your total education expenses, even a few paisa difference in exchange rates will impact your total budget. You can get the money transfer done either through a bank, a category II authorized dealer or an online marketplace that is tied up with both – banks and AD-II players. You need to choose a remittance service provider which will help you transfer money at best rates and take appropriate remittance charge. The remittance charge varies from Rs.250 to Rs. 2000 between different service providers. The table below showcases that it is more viable to transfer money abroad online through a marketplace that offers convenience at minimal charges and guarantee quick money transfer.
4. Keep an eye on forex rates
Foreign exchange rates are subject to considerable fluctuations and also differ among various banks and other money changers. Hence, it is vital that you keep yourself fully aware of these dynamic rates and use them to your advantage by buying when the rates are comparatively less. If you play your cards right, you could end up saving a lot of money in this process. There are several sites which offer you rate notification alert and you can use them to your advantage.
5. Open a local bank account abroad
One of the most practical tips for students going to study abroad, especially when the duration is a year or more is to open a local bank account there. Your university might even recommend some student-friendly bank account which will solve the problem of ATM fees upon withdrawals. Moreover, if you take up a part-time job and start receiving paychecks, this will prove to be very useful.
(By Sudarshan Motwani, Founder and CEO, BookMyForex.com)