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Living in the U.S. as an international student can come with some financial complexities. But a little preparation can help you manage your money and avoid costly mistakes. Read on to find out how to get started.
1. Learn About Money Customs in the U.S.
You may have some expenses in the United States that you have not needed to think about in your home country. Examples include:
- Tipping for meals with table service or delivery (usually 15% to 25% of the pretax bill).
- Paying for health care and health insurance.
- Sending and receiving wire transfers.
- Foreign transaction fees on credit cards (some cards do not have them; it pays to be aware).
You might even need to pay for water in some instances. A fellow student from your home country may be able to tell you about expenses that came as a surprise.
2. Choose a Financial Institution
Asking other international students for advice about banks or credit unions they use can be helpful. You may want to be especially attentive to fees and whether the financial institution you are considering has accounts geared toward students and ATMs on campus. Also consider how sophisticated or intuitive its mobile banking app is, especially if you know you'll be making frequent mobile transactions.
3. Open an Account
You can open a checking account, a savings account or both if you wish. Keeping money at a financial institution is safer than keeping it at home, and may even provide you with extra financial benefits.
Checking accounts may have monthly charges and usually pay little or no interest. They are good for paying monthly expenses. Savings accounts often pay interest, but may require a minimum deposit to open an account or earn interest.
You will almost certainly be offered a debit card with a checking account. These look like credit cards and can be used where credit cards are accepted. One big difference is that money is taken directly out of your account when you use a debit card; credit cards run on monthly billing cycles.
4. Learn About Credit
If you want to get a credit card, which lets you access a credit line with the issuing bank, it's a good idea to look for one marketed to international students. Because you may not have a track record of using credit in the United States, your choices may be limited.
Building credit using a secured credit card—a credit card with a spending limit secured by an upfront deposit—can be a good way to get on the U.S. credit radar. Once you establish a record of on-time payments, you'll have more choices.
Credit cards carry the risk of you going into debt by charging more than you can repay by the due date, but they also come with some consumer protections and benefits that cash and debit cards do not have.
5. Plan to Carry at Least Two Forms of Payment
You can decide exactly how much cash you want to keep on hand, but it's smart to have some with you. Cash is handy for vending machines, fast food, tips and similar small expenses. However, the U.S. coin shortage has led some businesses to require exact change if you pay in cash and to request that you use some other method of payment instead. Having at least two methods of payment with you can help ensure that at least one of them will be accepted.
6. Create a Budget
A budget is really a framework for covering all your expenses with the money you have available. Budgets should account for things that are not fun, including taxes and utilities, but also have room for things that are, such as travel and recreation.
If there's a gap between your income and expenses, consider part-time work or trying to cut expenses by learning to cook, opting for walking when it's practical and seeking out free recreational activities. Also check to see what discounts or freebies you may be entitled to with a student ID. Sticking to a budget can help you minimize any debt you may accrue while you are in school.
The Bottom Line
The U.S. financial system is almost certainly different from the one you are accustomed to, and it can help a great deal to ask a fellow student for help navigating it.
There are some financial products specifically marketed to international students, and those may be worth exploring. Credit cards can be particularly useful because they come with some consumer protections, including limited responsibility for charges if the cards are lost or stolen. Even if you have never had credit in the U.S., you may be able to get a foothold with a secured credit card. Experian CreditMatch™ can help you find one that is right for you.