Why are students required to learn about the international banking system?

A foreign bank account is essential for international students as soon as they reach a foreign destination. Therefore, choosing a bank with the most expansive features and perks is vital as you will be utilizing the services over the next few years.

As a student preparing to live overseas for the first time, managing your finances is likely one of your foremost concerns. However, with the sheer amount of global financial institutions, finding the right banks that cater to international students can be challenging.

Depending on your college/university program, the duration may range from one to four years. Having a bank account in a foreign country is therefore of utmost importance. In addition to paying for everyday expenses, you can use this account to do other transactions such as paying fees, transportation, rental, and many others.

How does the banking system work in foreign countries?

The banking system in foreign countries works a little differently than in India. Students must know about three basic accounts — checking accounts, savings accounts, and overdraft accounts (credit cards).

– Checking account:

For daily transactions, checking accounts are convenient, secure, and offer easy access to your money. For example, paying bills, grocery shopping, transportation, or making other purchases is usually done using a debit card.

However, different bank accounts have other policies such as minimum deposits, monthly fees, debit card charges, etc. Therefore, it is vital to open an account with zero deposit fees, zero withdrawal fees, zero transfer fees (or minimum transfer fees for international transactions), and zero or low-cost maintenance fees. Choose the checking account that gives you the most value based on your services.

– Savings account:

You can save money for future needs by keeping a savings account. Earning some interest on money in the account is a wise idea since it can compound daily, weekly, monthly, or annually. Account features, interest rates, and monthly fees vary between savings accounts. Making a more informed decision is easier when you are aware of the terms and benefits of the account.

A savings account is an excellent choice for students who opt for long-term programs and wish to have a part-time job while studying.

– Overdraft accounts:

A credit card, known as an overdraft account, may be helpful while in Canada. However, it would be best to think twice before getting a credit card as it may seem beneficial to have some extra cash when needed but be careful not to increase your credit card debt. In addition, maintaining an excellent credit rating in Canada is essential; a bad score may negatively impact you in the future.

However, if you are confident in your ability to manage a credit card responsibly — not exceeding the overdraft limit and paying at least the minimum amount each month, if not the total amount, your student years might be an excellent time to begin building up your credit score. It may be worthwhile to consider a credit card that offers air miles, free coffee or snacks, or points toward other expenses such as groceries.

What are interest-free overdrafts?

An interest-free overdraft allows you to spend up to a certain amount without being charged. Students often use this perk, but it is vital to keep in mind that it isn’t free money and should only be used in cases of an emergency. In addition, this loan usually needs to be repaid shortly after graduation, as the interest might accumulate.

Best banks to open accounts for students:
An international student may wish to open a bank account in a destination country that offers a maximum number of free cash withdrawals, free online transactions, no monthly or a low amount of average balance maintenance, is accepted at major outlets, and offers rewards points. In addition, the bank should have a significant number of ATMs and branches in the city you will be staying in.

1. Canada

Scotiabank is one of the most preferred Canadian banks for international students. Scotiabank has 2700+ branches globally and offers impressive facilities such as:

  • Free account opening with no monthly fees or maintenance.
  • Unlimited free transactions and online transfers.
  • Students are offered a bonus for signing up.
  • Great reward benefits.

Canadian Imperial Bank of Commerce (CIBC) is one of the oldest banks in Canada, serving Canadians for more than 150 years. CIBs has 1100+ branches and 4000+ ATMs in Canada.

CIBC offers excellent benefits to international students:

  • Unlimited free transactions and online transfers.
  • Zero monthly fees.
  • Students are offered a sign-up bonus.
  • Earn cash back or travel vouchers
  • Apply for a credit card without having a credit score history, proof of income, or a cash deposit fee.

Royal Bank of Canada (RBC) has the most extensive bank network system in Canada. In collaboration with the Canadian Government, RBC supports online direct payment transfer for the Student GIC Program and Student Deposit Program.

However, RBC offers a limited number of benefits for international students.

  • No maintenance fee for the first year.
  • Limited free transactions — 25 per month (CAD 1 per additional transaction).
  • Zero annual fees and no credit history are required for a credit card.
  • Rewards points earned through the RBC Rewards program can be redeemed at Starbucks and Amazon.
  • The RBC e-transfer system offers to send money through iMessage and Siri.
  • No monthly fees at Petro-Canada — save money on gas.

2. The United Kingdom

Although HSBC doesn’t have a specially designed account for international students, if you’re already an HSBC customer, you can set up this account before arriving in the UK. Open an account in India if you’re a new customer and the bank will transfer your account to the UK address. HSBC has one of the smoothest and fastest banking processes.

HSBC offers some good benefits to the international students:

  • Free transferring money to HSBC account globally
  • Free transferring and receiving the money to a non-HSBC account in Euros in EEA countries.
  • A nominal fee of GBP 5 for transferring money to non-HSBC banks globally, receiving money from the outside UK in pounds and all currencies.

With more than 1500 branches throughout the United Kingdom, Barclays is one of the most accessible banks for international students to set up an account with. In addition, the bank gives you the option of opening a current account in three different currencies (Euro, GBP, and US Dollar). Applicants must have reached the age of 18 and must be studying a two-year undergraduate or one-year postgraduate course within the United Kingdom.

The bank offers excellent benefits for the international students:

  • Unlimited free transactions and online transfers in all currencies globally
  • Zero charges for receiving money from abroad for up to GBP 100 and attracts GBP 6 for over GBP 100, which is relatively lower.
  • Free overdraft of up to GBP 3,000 starting at GBP 1,000 and increasing by GBP 1,000 each year studied.
  • Up to 10% cashback on shopping with participating retailers.
  • Get 12 months of free Perlego (online library).

Students who qualify for NatWest’s International Student Account must be at least 17 years old and have resided in the United Kingdom for no longer than three years. In addition to being a cheap way to send and receive money globally, it is also possible to open an account online. You can therefore apply for an account even before leaving your home country.

Natwest offers great benefits to the international students:

  • Free transferring money overseas.
  • Free account maintenance.
  • You can choose 1 out of 3 offers:
    • Get 50% off meals at restaurants across the UK with a free Tastecard for 4 years.
    • 1 year free Amazon Prime student membership
    • 4 years free national express card with 1/3 discount on bus travel.

3. The USA

Bank of America
For students under 25, Bank of America offers the Advantage Banking program, which provides a checking account with no monthly maintenance fee. However, the bank accounts must have a minimum deposit of USD 25 in the Advantage Safe Balance account and USD 100 in Advantage Plus accounts. Bank of America also charges USD 2.50 for transactions conducted at non-Bank of America ATMs and USD 5 outside the U.S.

Chase offers one of the best accounts for the students. With the Chase Bank’s College Checking Account, the students can enjoy a USD 100 sign-up bonus with zero minimum deposit and zero cost service fee for college students between 17 to 24 years of age until after graduation (up to five years after account opening). In addition to its 4,700 branches, Chase has 16,000 ATMs nationwide, which contributes considerably to its popularity.

A virtual student wallet is available through PNC (Provident National Corporation) Bank. As part of the new account package, the student receives three in one account — a checking account, a short-term savings account (which earns interest), and a high-interest savings account that helps them plan for their long-term goals. Spend, Reserve, and Growth are the account names, respectively.

These three accounts are integrated in the PNC mobile app to help students manage their finances. In addition, student benefits are available for six years in the account; therefore, it is beneficial for the students who are studying for a long term in the USA.

However, there are a few drawbacks of the PNC account — no physical locations are available in all states, and the checking + saving accounts are free until graduation. Students need to pay a service fee after they graduate.

4. Germany

Deutsche Kreditbank (DKB) was founded in 1990 and is considered one of the oldest and second-largest Direct banks in Germany. DKB is one of the most preferred banking systems for international students as it offers excellent benefits

  • Free online transactions
  • Free account maintenance
  • Free cash withdrawals globally
  • Zero foreign transaction fees
  • Discounts on gym memberships
  • Great online and offline shopping
  • Discounts on entrance fees to tourist places

Vivid Money
Vivid Money is a Fintech company offering a banking system across Germany. Vivid Money is backed by a German ban and authorized by BaFin (Federal Financial Supervisory Authority). Vivid Money is a new bank offering significant benefits to young people, especially students:

  • Free student bank account with Visa debit card
  • Free SEPA transfers
  • Free cash withdrawal for up to EUR 1000 per month in Germany and the EU
  • Free cash withdrawal up to EUR 200 globally
  • Offers up to 25% cashback

Deutsche Bank:
Deutsche Bank is one of the leading financial service providers globally and has a branch set up in India as well. Deutsche Bank offers great limited benefits for students. However, it only provides free accounts for students up to 30 years old and no free Visa or Mastercard facility.

  • No monthly fees or average monthly balance requirements.
  • Offers free money withdrawal at 38,000 ATMs in 31 countries.
  • Free online banking.
  • Free Giro Card (Maestro EU card).

5. Australia

Full-time students seeking a fee-free account with a major bank should consider the Westpac Choice Student account. The account can be opened online up to 12 months before arrival. The Choice account gives you access to online money transfers, secure online shopping with a MasterCard debit card, and mobile banking on the go.

ANZ (Australia and New Zealand Banking Group Limited)
In addition to offering students straightforward financial solutions, the ANZ Student Access Advantage does not charge account fees, making it Australia’s most popular bank account for teenagers. Students must be enrolled full-time and present a student ID at the beginning of each academic year to open an ANZ student account.

Commonwealth Bank
As one of Australia’s oldest and largest banks, Commonwealth Bank has been around for more than 150 years. Students can open an account within three months of arrival in Australia. There are no monthly fees with Commonwealth Bank, making it ideal for students who need a day-to-day transaction account. In addition to free access to exclusive offers and competitions, students can safely use their debit cards in stores and online.

6. New Zealand

Westpac offers services in both Australia and New Zealand. In addition to low fees and a debit card, Westpac provides a Save & Win account that awards monthly cash. Free online banking is also available for students.

ASB has branches at several major New Zealand campuses. They charge no transaction fees or account maintenance fees. In addition, using the ASB Tertiary Account, students can obtain an interest-free overdraft of up to 2500 New Zealand dollars. As an added bonus, students can get free fries at McDonald’s by paying with their debit cards.

ANZ (Australia and New Zealand Banking Group Limited)
Students can choose from two accounts included in ANZ’s International Student Package: an account without monthly fees and an account of their choice. You will be exempt from current account fees by linking the ANZ Visa debit card to the account.

Advantages of an International Bank Account for Students:

  • With a foreign bank account, you can set aside money to fund foreign education. In addition, it eliminates your future exposure to rupee depreciation.
  • After accepting the university’s admission offer, you are likely to incur various expenses. These include paying the tuition fees, grocery shopping, local transport, shopping, deposits for the accommodation, and many more. It is significantly cheaper to pay the expenses from a local account in the destination country than to transfer from an Indian account.
  • Obtaining a foreign bank account before studying abroad will reduce half the stress of managing your finances. This account will also allow you to receive money from your family in India.

Final Thoughts

Students are eligible to open Student Bank accounts if they are enrolled in university or colleges for studying abroad. Since these accounts do not charge account fees, offer free transactions, credit cards, interest-free overdrafts, and other special offers, the students can save hundreds of dollars a year.

Student bank accounts should also be used with caution and sensibly to avoid financial stress later in your studies. It’s important to understand that nothing in life is free, and you cannot always rely on the banks for money.

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