Graduate school comes with several financial challenges that require planning and careful attention to details. Chief among these challenges are the two big wallet busters: university reimbursements and international travel. Often these two combine to form a deadly, money sucking hydra. You will inevitably need to pay for something – airline tickets, hotels, fuel, equipment, contractors – out of your personal funds, and then file for reimbursement with your university. Depending on how efficient your finance office is, it could take anywhere from four days to several months for your reimbursement to be issued. If you paid with a credit card, during this time you’re paying interest on those charges.
International travel adds another layer to the mix. Most credit card companies will charge a foreign transaction fee (often 3%), there’s a high degree of variability regarding which networks are accepted where, and many nations have adopted EMV chips (a feature few US cards have) for added security. Whether it’s for a field season or a major scientific conference, you will probably have to make at least one big international trip. If you haven’t planned ahead, you may find yourself stuck with little or no functional currency, and end up leaning heavily on cash advances, travelers checks, or other high fee alternatives.
You should use a credit card to pay for reimbursable expenses, especially travel, if for no other reason than you need money in your bank account for things like food and shelter. If you’ve read my previous post–Credit, why it matters, how to build it, and how to use it–then this should seem familiar. I’m talking about your tank, with some particular caveats for international travel. If you’ve planned ahead and paid attention to the details, you can carry an extra balance for several months without incurring any additional fees.
There are three things you need to keep in mind while navigating this mine field:
- Interest Rates: most cards will give you a 0% introductory APR for the first 6 months to a year, although some will give you a reassuring 18-months. Generally speaking, you should always have at least one 0% APR card in your wallet to absorb the big, unexpected expenses that will take a few months to reimburse. The annual fee often doesn’t matter, since most companies waive that fee for the first year and you won’t be keeping this card long-term. Once that 0% APR goes away, it’s time to pay off your balance (actually, you should do this long before the introductory rate expires), cancel the card, and find a new one.
- Foreign Transaction Fees: You need a card that has a 0% foreign transaction fee, otherwise those 3 cents per dollar really add up. Fortunately, there are many decent credit cards that have no foreign fees.
- EMV Chip: The EMV (Europay/Mastercard/Visa) chip is a security feature on many credit cards issued in Europe, South America, Asia, and Oceana. Some nations have transitioned completely to chip cards while others can handle both “chip and PIN” and “swipe and signature” cards. The chip itself re-encrypts your data every time the card is used, making it difficult for skimmers to grab you credit card info. Since these cards are significantly more secure, expect them to become more common. Unfortunately, swipe cards don’t work in EMV readers. Some places have scanners that do both, but many do not. If you’re travelling to a country that primarily or exclusively uses EMV chip readers, you may find that your American swipe card isn’t worth the plastic it’s stamped on. Wikipedia has a comprehensive list of regions where EMV chip cards have been implemented.
Cash is Still King
Regardless of the cards you’re carrying, cash is still the best option for small transactions, just make sure to save the receipts (yes, graduate student, you should expect to be reimbursed for food during thesis-related travel, either as a direct reimbursement of expenses or in the form of a per diem). If possible, save yourself a headache by paying for alcohol and other non-reimbursable expenses separately, so they don’t appear on the your receipts and save someone the headache of deducting those charges (and any associated taxes) from your receipts.
Why is cash king? Most major banks have a flat fee (mine is $5.00) for withdraws from foreign ATM’s (but check to make sure they’re in a partner network). This means that a withdraw of more than about $100 will be much cheaper than the exchange rate you get at the airport currency exchange desk. For smaller purchases, you’ll have currency guaranteed to be accepted wherever you go or if your cards are declined or account accidentally suspended. At minimum, you should make sure you have enough cash to feed yourself for the remainder of the trip and get back to the airport.
Watch that Exchange Rate
If you’re travelling in a developing or volatile country, you may find that the exchange rate fluctuates dramatically, sometimes daily (on one of my field seasons, there’s was a $0.20 swing in value against the dollar over the course of a few days). Some university finance offices will calculate reimbursement based on the value against the dollar on the day of the charge, some will base it on the value the day the reimbursement was filed. If you find yourself in this situation, your reimbursement could end up several hundred dollars off the actual expenses. In these cases, it is best to sit down with someone from your financial office. Bring a print-out of you bank or credit card statement so you can demonstrate the actual value when those charges were made. This goes for getting over-reimbursed, too. Not only is claiming more than you spent for reimbursements unethical, it also takes money out the pool that other grad students need to draw from, which would make you an asshole.
The BankAmericard Travel Rewards card hits all three requirements — 0% APR for 12 months, no foreign transaction fee, and an EMV Chip — and with no annual fee, it’s worth hanging on to after the introductory APR runs out as a back-up for travel. It also has a decent rewards rate that can be used for travel expenses. Unfortunately, the BankAmericard requires an excellent credit score.
If you have good credit, the Capital One Venture One is a solid travel card with no foreign transaction fee and 0% APR for 12 months.
If you have bad credit or no credit, the Capital One Secured Mastercard has no foreign transaction fees and is a good card for building or rebuilding credit. All Capital One and Discover cards have no foreign transaction fees. Discover tends to be accepted in fewer places around the world, but it is the dominant American network in China and has wide acceptance in Japan, Brazil, and South Korea.
For the record, I carry a BankAmericard Travel Rewards as my main travel card.
I am not a financial advisor, though I did consult a few for this post. This advice is based on my own experience as a graduate student and your mileage may vary, though I hope some of it proves useful to you.