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As the school year winds down, many college students are likely thinking about their plans for the summer months or even looking ahead to the fall semester. For some, this may involve a study abroad program, a chance to immerse oneself in another culture and learn valuable life lessons along the way. My three-month stint at Queen Mary University of London firmly cemented my love of travel, and hopefully many of our readers are planning similar opportunities for their children as I type.
The sheer logistics of living abroad for an extended period of time can be challenging, but there’s one thing that shouldn’t be: finances. If you (or one of your children) will be taking part in a study abroad program this summer or this fall, it’s essential to start planning now. Today I want to go through 5 top reasons why you should open a new credit card ahead of your child’s departure to another country.
1. You can easily earn a ton of points.
One of the quickest ways to boost your point balances by a significant amount is to open a new travel rewards credit card. This is primarily due to the lucrative welcome bonuses many of these cards offer. Here are some of the best ones out there right now:
Chances are quite good that your child will be racking up some large expenses with tuition, books, lodging and even traveling, so you shouldn’t have any problem reaching these spending thresholds.
Of course, you can continue your earning spree by selecting a card with category bonuses, especially ones that your kid will be using quite frequently. For example, the Chase Sapphire Reserve offers 3x points on both travel and dining purchases, so anytime your son or daughter dines out or hits the road to explore the country, you’re earning a nice bonus of Ultimate Rewards points on those purchases.
2. You can avoid foreign transaction fees.
Anyone who travels outside the US even once per year should have a credit card that waives foreign transaction fees. If you send your child abroad with just a debit card or a plain-Jane, no annual fee credit card, you’ll likely see a 2.7% – 3% fee tacked onto every purchase he/she makes. I’d be willing to bet that most study abroad programs these days aren’t exactly cheap; why add to this cost unnecessarily?
There are a wide variety of cards that do not charge these foreign transaction fees, so be sure to review our list to select one that fits for you. And even if you already have a card that waives these fees, signing up for a new one gives you the benefit of a large welcome bonus that an existing card won’t!
3. You can build your child’s credit history.
The third reason why you should consider opening a new card isn’t selfish in that it won’t earn you points and won’t save you money. One of the best things you can do for your children is to add them as authorized users on a new (or an existing) credit card. My parents both did this for me when I was in high school and college, and when I first got into the workplace and on my own, I found that I was able to immediately get approved for new credit cards right away. That’s because banks could look at my credit score and see my parents’ histories of on-time, in-full payments, low utilization and a variety of other positive factors. Since my credit profile was associated with those accounts, it demonstrated to issuers that I too could responsibly manage any lines of credit extended to me.
Just be aware that by adding your son or daughter as an authorized user, you become responsible for any and all purchases made on the card. If you’re worried that may present an issue, consider going with an American Express card. This is (at the time of writing) the only major credit issuer that allows you to set predetermined spending limits on authorized users.
4. There’s better protection on purchases and against fraud.
Another reason that doesn’t have the “flash” of the bonus points but can be valuable nonetheless: providing added protection for your son or daughter. Generally speaking, most credit card issuers offer a $0 liability benefit to cardholders for fraudulent purchases on their cards. In addition, the card isn’t pulling directly from your bank account balance, so it’s not taking money from you. As a result, if the card gets lost or stolen and the thief tries to run up a huge balance, you likely won’t need to worry about it impacting your finances.
Contrast that with having your child use an ATM or swipe a debit card. While there is some protection for fraudulent debit card purchases, these are still immediately impacting your account balance. This could lead to bounced checks or overdraw fees for legitimate purchases. And of course, taking cash out of the ATM leaves your son or daughter open to petty theft with no way to recover the lost money.
This doesn’t stop with fraud, however. Don’t forget that many popular travel rewards credit cards offer added layers of protection for if (or when) things go wrong. Here are some examples:
These benefits (and others like them) can come in handy not only when it comes to purchases ahead of the study abroad program but also for trips during the program.
5. You can use the card (or the points/miles) to go visit!
A final reason to go for a new card now is simple: to actually go and visit! My mom and sister came to London for Thanksgiving when I was studying abroad, and my wife’s family did something similar when she was there as well. If you open a card and grab a welcome bonus, it can allow you to head to whatever exotic locale your son or daughter is studying. Alternatively, if you open a card that’s good for airfare purchases or includes lounge access, you can earn bonus points and enjoy added perks along the way.
What are some good options?
If one or more of these reasons apply to you, what card should you actually get? While there’s no single best card for every type of traveler out there, here are a few broad categories for you to consider:
Again though, every card will appeal to different demographics of parents out there, so be sure to carefully evaluate the benefits on the cards you’re considering before pulling the trigger.
Bottom Line
Studying abroad can be one of the most enriching experiences of one’s lifetime, and it certainly was for me. If you have a son or daughter getting ready for a summer program or a fall semester out of the country, you probably have your work cut out for you. However, one of the easiest things you should do is to open a new travel rewards credit card. Hopefully the reasons I highlight above prove that very fact to you!
Source: thepointsguy.com