Heirs get cash found in walls,It's almost a rite of passage: As soon as the dorm room is packed up, college students and recent graduates start packing again to head overseas to study, teach English or just travel, sometimes for a year or more.
But with foreign-transaction fees on credit cards, stiff fees on ATM withdrawals and loopholes in health insurance, families ought to consider more than transportation and the weather as they plan.
Credit cards. Most U.S. banks add foreign-transaction fees of as much as 3% on each credit-card purchase.
American Express, J.P. Morgan Chase and Citigroup offer reward cards without transaction fees, but the cards usually are aimed at consumers with top-notch credit and charge an annual fee. Those factors make them more appropriate for parents, who can make their kids authorized users on the account.
Students and recent grads should consider Capital One Financial, since the bank doesn't charge foreign-transaction fees on any of its cards, including its card designed for students. Bank of America's new Travel Rewards Card has no annual fee or foreign-transaction fees.
Be wary of merchants who offer to ring up a transaction in U.S. dollars. Typically, they will use a less-favorable exchange rate, so you'll pay more than you should.
Bank accounts.The more rural the areas you visit, the more cash you will need, as fewer merchants accept plastic. But cash might be harder to get, since ATMs aren't as plentiful. On top of any ATM fees assessed by the machine's owner, you might pay foreign-transaction fees of up to 3% and other charges.
Bank of America offers free ATM use through an alliance with certain banks in Europe, China and Mexico, such as Barclays and China Construction Bank, but it charges $5 plus a 1% fee for using other ATMs.
Credit unions, small banks and online banks tend to charge lower fees and some reimburse other banks' ATM fees.
Even with all the charges, you likely are better off getting cash in the local currency from an airport ATM than from a bank or currency-exchange desk. And be sure to call your bank and credit-card issuer before you go to tell them what countries you will be in and for how long.
Health insurance.Many U.S. health plans offer little or no coverage when you're abroad or they may impose time limits on coverage, so most formal study-abroad programs include a health plan. If your time abroad is open-ended, you might need to purchase travel insurance or international medical coverage, which generally costs a young person a few hundred dollars.
Regardless of the health plan, look to see what's covered. Many plans exclude treatment for pre-existing conditions or mental-health issues or reimburse you only after treatment. Many plans offer emergency medical evacuation, but might transport patients only to the closest "appropriate" hospital rather than bringing them home.
Wooing the Unwed
Call it financial planning for the kind-of-married.
In recent years, financial advisers and estate attorneys have started offering services for unmarried couples—same-sex or not—who must deal with the same financial issues as their wedded compatriots but lack the piece of paper that makes the process much simpler. And professionals catering to this group say they can barely keep up with demand.
Married couples can take much for granted, like the ability to transfer assets between spouses without tax implications or the right to assume end-of-life caregiving decisions.
But for unmarried couples, there's a range of paperwork—from trusts (which can cost $1,500 to $5,000 to establish) to prenup-style domestic-partnership agreements—that's required to guarantee the proper protections and cost-saving measures. Otherwise, they could run into problems with issues like, say, whether a surviving partner will be able to remain in the couple's home after the other passes.
But the problem, say experts, is that the issues involved are so complex that even specialists devoted to this type of planning can make mistakes. Estate planning is one potential trouble spot. It's a crucial piece of planning for unmarried couples because there's no assuming the "spouse" will get what he or she deserves or expects, and yet there are few cookie-cutter solutions for drawing up legal documents for unwed partners, says James Lange, an attorney and certified public accountant who owns Lange Financial Group in Pittsburgh.
Even small planning matters can cause problems, says J.T. Hatfield Smith, a vice president of SPC Financial in Rockville, Md. Take homeowners insurance: If the property is under only one partner's name, the policy won't necessarily cover the other's personal items.