Lana Oconnell
Sending money to the US can be a challenging process for the parents of international students, with many factors to consider, including transfer fees, currency exchange rates, and security. There are several ways to transfer money, including wire transfers, money transfer services, and credit cards. It is important for parents to research and understand the different options available to them, as well as the regulations and limitations of each method, to ensure their child receives the funds securely and in a timely manner.
| Characteristics | Values |
|---|---|
| International money transfer services | Western Union, Xoom, Wise, TorFX, OFX, Revolut |
| Transfer methods | Wire transfer, money transfer apps, bank account, phone call, online |
| Transfer costs | Transfer fees, currency conversion charges, service tax, exchange rate markups |
| Transfer speed | Fast |
| Transfer security | Secure, requires sensitive banking information |
| Transfer reversibility | Non-reversible |
| Transfer limit | May depend on the country and institution |
| Tax implications | Generally not considered taxable income in the US |
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What You'll Learn
International wire transfers
Bank transfers
Banks offer the facility to send money to international banks through wire transfers. To do this, parents can visit their bank branch, or use online banking or a mobile banking app. When using a bank for the first time, you may need to create and verify an account. This will usually involve providing an image of some ID. You will then need to provide the recipient's information, including their address as on file with their bank, and the country of their bank account. You will also need to select the currency in which you want to send the money. If you do not know the currency, the transfer will be sent in US dollars.
Transfer services
As an alternative to banks, there are many stand-alone transfer services to pick from, such as PayPal, Wise, or Western Union. These services can mean faster transfers and can avoid international transfer fees. However, they may add a percentage fee onto the exchange rate.
Things to consider
It is important to consider the cost, speed, and security of the transfer. The cost of the transfer will include transfer fees, currency conversion charges, and applicable service tax. It is also worth noting that international wire transfers have a tendency to incur additional fees between the banks. There is also the risk of information being erased from the payment before it reaches the recipient.
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Foreign exchange rates
International wire transfers can be costly due to fees charged by banks and third-party institutions. Additionally, the exchange rate applied by banks may include a markup to compensate for market risks and desired returns. These factors can significantly impact the amount of money received by the student. Therefore, it is advisable for students to research and compare exchange rates offered by different financial institutions to find the most favourable rates.
Online platforms like Xe offer international money transfer services to over 200 countries and support 100 currencies. Xe provides live exchange rates, ensuring transparency in the cost of transfers. They also offer various features, such as rate alerts, rate trend analysis, and regular automated transfers, to help users make informed decisions.
Another option for parents sending money to their children in the US is to use a forex card. ICICI Bank offers a student forex card that can be reloaded instantly using the iMobile Pay app. This provides a convenient and quick way for parents to ensure their children have access to funds while studying abroad.
It is important to note that the US does not consider money gifted or transferred from foreign sources as taxable income. However, there may be other taxes and fees associated with the transfer process, such as currency conversion charges and service taxes, which should be considered when planning financial arrangements.
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Student credit cards
International students in the US often face challenges when it comes to managing their finances, especially with the added complexity of receiving money from their parents abroad. While international wire transfers are a common method for parents to send money to their children studying in the US, these transfers can come with high fees and the risk of information being lost during the transaction. In such cases, international students may benefit from using student credit cards, which can help them build a successful financial future when handled responsibly.
When choosing a student credit card, it's important to consider the rewards and benefits offered by different card providers. For example, the Bank of America Preferred Rewards program offers a 25%-75% rewards bonus on eligible credit cards. The Capital One Quicksilver Student Cash Rewards Credit Card offers 8% cashback on entertainment purchases booked through the Capital One Entertainment portal and 1.5% cashback on all other purchases. The Discover it® Secured Credit Card is another option, which offers 2% cashback on purchases at gas stations and restaurants, up to $1000 each quarter, and 1% cashback on all other purchases.
Additionally, the Mastercard Student Credit Card offers unlimited 3% cashback at grocery stores (excluding superstores), dining, entertainment, and popular streaming services, plus 1% cashback on all other purchases. It also comes with a $100 early spend bonus when you spend $300 in the first three months and $0 fraud liability for unauthorized charges.
It's important to note that international students should do their research and carefully compare the various student credit cards available to find the one that best suits their needs and helps them build their credit responsibly.
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International money transfer services
Cost, Speed, and Security
When choosing an international money transfer service, it's essential to consider the cost, speed, and security of the transaction. Transfer fees, currency conversion charges, and applicable taxes can impact the overall cost of sending money. Additionally, the speed of the transfer may vary, with some services offering same-day or instant transfers, while others may take several business days. It is also crucial to select a reputable and secure service to protect your financial information and ensure the safe delivery of funds.
Popular International Money Transfer Services
- Wise (formerly TransferWise): Wise offers competitive exchange rates and low upfront fees, typically less than 1% of the transfer amount. Transfers can be funded through a bank account, debit card, or credit card, with varying delivery speeds.
- MoneyGram: MoneyGram provides international money transfer services to over 200 countries and territories. They offer zero fees on the first transfer and competitive foreign exchange rates. MoneyGram also has a rewards program that provides discounts on subsequent transfers.
- Ria Money Transfer: Ria is a well-reviewed service that offers competitive fees and favourable conversion rates. They provide transfers to over 190 countries, including the US, with receiving options such as cash pickup, bank deposit, mobile wallets, and home delivery.
- PayPal: PayPal allows international money transfers, although the fees can be relatively high at 5% of the transferred amount, plus an additional fee. PayPal is widely used and accepted, making it a convenient option for many users.
- Bank Wire Transfers: Parents can utilise their banks' international wire transfer services to send money directly to their child's US bank account. While this method may have higher fees and slower transfer speeds, it often offers higher transaction limits compared to online remittance channels.
It is always advisable to research multiple options and compare fees, exchange rates, transfer speeds, and security measures before selecting an international money transfer service. Additionally, understanding the foreign exchange rates and any applicable tax regulations can help ensure that your transfers are efficient and compliant.
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Opening a US bank account
As an international student in the US, you will likely want to open a US bank account. This will make it easier to manage your finances, and it is cheaper than withdrawing money from a foreign bank account. You can also pay your bills online or by check, and use credit cards without the hassle or hefty international banking fees.
International students can open a checking, savings, or other deposit account without a parent being present, but the student must be at least 18 years old. The process of opening a bank account may vary depending on the bank and the state. Most universities accept tuition payments directly from US bank accounts, streamlining the payment process and helping to avoid complications with foreign payments or exchange rate fluctuations.
When opening a bank account, you will generally be required to provide two forms of identification as well as your tax identification number. Some banks may require more documents than others. In general, you will need the following documents in order to open a bank account in the US:
- A valid passport
- An I-20 or DS-2019 form
- An F-1 or J-1 visa
- Proof of a US address
- A Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Form W-8BEN if you are not eligible for an SSN or ITIN
After you open the bank account, you'll need to make a deposit to activate the account.
Many banks offer incentives to students for opening accounts, such as cash bonuses or free SIM cards. However, read the fine print with any bonus offer to make sure it is a good deal for you. Some banks require you to qualify for a premium bank account to be eligible for the best perks. Otherwise, you will pay a fee for transactions like wiring money.
- Bank of America: Bank of America has many financial centers and ATMs throughout the US. They offer language interpretation services in over 200 languages.
- Wells Fargo Everyday Checking Account: This student account has a $10 monthly fee, waived for students aged 17-24. Wells Fargo provides access to over 13,000 ATMs and 5,000 branches, as well as a reliable mobile app for account management, payments, and transfers.
- Capital One 360 Checking Account: This account has no monthly maintenance fees and no minimum balance requirement, which is excellent for students on a budget. Capital One also allows you to withdraw cash for free at over 70,000 ATMs through its partnerships.
When choosing a bank, consider factors such as fees, convenience, and the ability to manage your money from your phone or computer. You may also want to open an account with a location on or near campus.
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Frequently asked questions
Wire transfers are a popular way to send money to international students in the US. They are known for being safe, secure, and fast. However, they can be expensive due to transaction fees. It's important to research the company you are using for wire transfers and be cautious of scammers. Other options include using money transfer services such as Western Union, Xoom, or TorFX.
In the United States, money gifted or transferred to an individual from foreign sources, such as family members from abroad, is generally not considered taxable income. However, it is important to check with an accountant or tax specialist to ensure compliance with tax regulations.
International students may encounter issues with their wire transfers, such as high transaction fees, delays in processing, or missing information. It is important to be aware of the policies and procedures of both the sending and receiving institutions to avoid these mistakes. Additionally, students from countries with weaker currencies may need to be mindful of foreign exchange rates to ensure they are not outspending their means.
