After analyzing the ‘how much’ and ‘for what’ of the US education finances, you’ll eventually analyze your options for carrying money abroad. It is important to know your options and choose the best option for you based on convenience, security, speed or a suitable currency conversion fee. Here are 4 convenient currency conversion options for everyone traveling to the US for education.
A convenient and secure way to carry money abroad, prepaid cards are offered by all leading banks and some non-banking financial companies as well. “It is the most economical and safe way of carrying forex abroad. They are enabled with chip and pin, making it safer than other instruments,” says Sudarshan Motwani, Founder and CEO, BookMyForex.Some organizations charge a nominal fee of Rs 100-250 for issuing the card while others offer it for free. Prepaid cards are useful for daily living expenses, shopping, booking flight tickets, etc. Some colleges also accept fee through these cards. Swiping of prepaid cards at merchant point of sale terminals does not attract a fee.
Also, you can lock-in the exchange rate before you travel overseas. “The applicable forex rate is the one on the day of purchase of the prepaid card,” says Motwani. Parents can top up the balance on the prepaid cards as per need.
The downside to these cards is that countries including the UK, the US, Canada and Australia allow for limited withdrawals— around Rs 20-40,000—from ATMs in one go. Some banks may also charge a fee for withdrawals.
Foreign currency demand draft (FCDD)
Foreign currency demand draft (FCDD), which costs Rs 300-500, is one of the most efficient ways to carry out forex transactions. “It saves intermediary bank charges, and the amount gets deposited directly into the beneficiary bank’s account,” says Motwani. FCCD is valid for six months and can be encashed at the beneficiary bank.
It is best used for payment of university and hostel accommodation fee. Bear in mind though, it takes nearly two weeks to credit the money into the payee’s account via FCCD. So, it cannot be used where the payment has to be made immediately.
“Many universities are now recommending alternate mode of payments to pay the fees since FCCD takes time. Also, in case of damage to the instrument (demand draft) the refund process is long and cumbersome,” says Mahesh Iyer, CEO, Thomas Cook, India.
A speedy way of sending money abroad, wire transfers can be used for a variety of payments—college application fee, tuition, hostel fee, etc. “It takes approximately 24-48 hours for the money to be transferred. A reference number of the transaction is given immediately to keep track of it,” says M.P. Hariprasad, Head, Treasury, CentrumDirect.Wire transfers may incur commission charges from both the sender and the receiver banks.
The above article first appeared in
and is written by Hiral Thanawala