Parents should consider adding a credit card for spending and emergencies
Sending your kid abroad for the first time to soak in art in Paris, history in Cairo or language in Lima, can be a frightening prospect. That’s why many parents should carefully consider including a credit card for spending and emergencies, but which type of plastic would be best?
The correct card can provide an easy way for a student traveler to buy meals, train tickets and other essentials abroad, especially if you’re footing all or part of the bill. Even if your child plans to operate mostly in cash, a credit card is a must for emergencies.“There are so many situations you can get into where you’re really in a bind,” says Stacie Berdan, a global communications consultant and author of “A Parent Guide to Study Abroad” and “A Student Guide to Study Abroad.”
Whether studying abroad for a few weeks or several months, a student traveler can fall ill, lose money to a pickpocket, watch an ATM swallow a debit card or miss a bus, plane or train and end up stranded, Berdan says. In any of those scenarios, a credit card can come to the rescue, offering a quick way to pay for medical treatment, a hot meal or a night of lodging.
For example, family travel writer Dana Zucker made her 20-year-old son Sam an authorized user on her American Express Platinum card long before he left to spend a semester in Shanghai. She breathes easier in Omaha, Nebraska, knowing he has access to her credit line and benefits in China.
In fact, the card’s concierge service once rescued Sam and twin sister Sydney when they got stuck with no money in Cassis, a fishing village in France, where banks had closed at noon that day.
“The kids got on the phone with AmEx and got cash right away,” she says.
Choosing a card for a student traveler
If you want to make sure your child has the right plastic for student travel, consider these options that can be used in combination with each other for spending and emergencies. Here are the top three ways to get plastic in your child’s wallet for a summer, semester or year abroad:
Option No. 1: Let your kid use your card
Making your child an authorized user on your card might be your best option. This strategy has big advantages, including convenience. If you’ve already given your offspring card privileges, as many parents do when a kid heads to college, you’re good to go.
There are so many situations you can get into where you’re really in a bind.
If you haven’t already made your child an authorized user, you can do so easily by calling or logging in to your card issuer’s online portal. Either automatically or at your request, depending on the card company, the issuer will send your child a card linked to your account in his or her own name.
This gives your child access to your presumably higher credit limit and all the benefits on your card in case of an emergency, and you can make sure the bill never inadvertently goes unpaid and can keep tabs on spending.
Another upside is that the credit history of that card will be added to your child’s credit report, giving him a credit boost. However, if you have a pattern of late payments with the card, you may want to consider the other options below, as some cards also report negative information associated with that card to an authorized user’s credit report, which will hurt your child’s credit.
If you choose to go this route, talk to your child about what can and can’t be charged, and set spending limits. Some parents make agreements with their kids: “Yes, you can charge that weekend side trip, but you must PayPal or Venmo me the money to put toward the credit card bill.”
Creating clear lines of communication around finances will serve both you and your child well during what can be a stressful time, says GoAbroad.com director Megan Lee, who has studied abroad and led student trips.
If you make your child an authorized user, set up alerts for purchases over a certain amount so you can monitor charges, Zucker recommends. Some cards also allow you to set spending limits for authorized users, which you may want to consider to keep your child’s spending in line with any agreed upon budget.
Option No. 2: Your kid gets a card of his own
If your child is over 21 or at least 18 years old and has a steady income source, she can apply for her own credit card or use one already in her wallet. However, the card should be one that charges no foreign transaction fees, which tack on anywhere from 1 to 3 percent to each overseas purchase.
If your child has his or her own credit card, this can provide a little more independence, as well as practice managing a credit account. You also won’t have to worry about being on the hook for any frivolous purchases, such as a gondola ride in Italy.
However, the downside is that it is impossible for a high school student under 18, and tough for a college student without a job, to get a card. New cardholders also tend to have lower credit limits that might not offer enough spending power in an emergency far from home.
For example, one mom on a Fodor’s travel forum fretted that her son’s $500 credit limit wouldn’t cut it when he was studying in London. Also, a student or starter card might not carry as many benefits as, say, your premium rewards card.
If your child wants to carry her own card, consider also making her an authorized user on one of your cards with a higher credit limit as well with the caveat that she use the secondary card only in a pinch.
Option No. 3: Your kid uses a prepaid travel or debit card
Your child could get a prepaid travel card or debit card that can be used to make purchases like a credit card, as well as to get cash from ATMs.
The big advantage to prepaid and debit cards is that your child is spending cash from an account, which eliminates issues with bill payments and debt.
However, prepaid travel cards sometimes come with big fees, including foreign transaction fees and foreign ATM fees. There’s also the possibility your child could lose the card and temporarily lose access to funds. So, you probably will want your kid to carry a credit card just in case.
For example, Albuquerque, New Mexico, safety consultant Suzanne Sibole’s daughter India is spending her junior year of college in St. Petersburg, Russia. For spending, India uses a Charles Schwab debit card popular with travelers because it has no foreign transaction fees and no foreign ATM fees.
However, India also has been an authorized user on her mom’s credit card since she was 18. “It’s just a backup,” Sibole says.
Study up on using plastic abroad
There are steps you can take to make sure cards work smoothly during student travel. Here are some tips for helping your child select the right card and get the most out of it on the trip:
- Consider the destination.
Keep in mind that credit cards are more widely used in some countries and locales than others.“Developing countries don’t always have the financial or internet infrastructure to handle credit cards regularly,” Lee says.
For less-developed destinations, students should take a combination of financial tools including emergency cash and a debit card, but should still carry a credit card, she says.
“As a program leader in East Africa, I did take some students to clinics and hospitals where their emergency credit card came in handy,” she says.
- Buy plane tickets on a credit card with benefits.
Book the plane ticket on your best travel card. For example, Zucker used her AmEx Platinum for her son’s ticket to China due to perks such as concierge.Check your child’s eligibility before you book. For example, Visa Signature cards offer travel benefits to the cardholder’s dependent children under age 22.
Go over the benefits with your child, and have him program the international number for the benefits administrator into his phone.
- Check for foreign fees.
Some credit cards charge a foreign transaction fee for any purchases made outside the United States.Over a semester or year abroad, those charges can add up to hundreds of dollars, so make sure your child takes a card that doesn’t charge these fees.
If she plans to get her own card, Bank of America’s BankAmericard Travel Rewards Card for Students offers a sign-up bonus worth $200 and no foreign transaction fees.
- Tell your card issuer about travel plans.
Could it trigger a fraud alert if you’re in Albany, New York, while your authorized user kid is making purchases from Albania? Possibly, but you can reduce the chances by notifying the issuer of your child’s travel plans.Also sign up for text fraud alerts for instant notification of any problem, Sibole says.
For example, her daughter recently used her credit card in Russia to buy a ticket to Greece for spring break. The issuer froze Sibole’s card despite the travel notification she had filed. However, Sibole received a text alert and called the issuer.
“I got it cleared up right away,” she says.
- Keep account info stashed safely.
If your child is carrying her own card, a trusted relative at home should keep account information in a safe place in case of a problem, Berdan says.For example, with a credit card, you could pay the bill in a pinch if necessary. And with a debit or prepaid card you could transfer funds.
Before heading to Russia, Sibole’s daughter gave her parents the login and card information for her debit card. “Now we can replenish the account if we need to,” Sibole says.
And Berdan recommends giving your child this credit advice: “If you’re going to use a credit card, make sure you use it wisely,” she says. “You don’t want to come back to very high-interest debt with no money to pay it off.”