Hi everyone, I’m from New Zealand and will be studying in California for my bachelors beginning this fall.
I have two options in terms of money:
I can sign up for a debit card with Mastercard. It’s a special kind of card, and what happens in that when I sign up for it, it locks in the exchange rate from NZD to USD on the day of the signup (so even if the exchange rate changes, the rate for putting NZD onto the card doesn’t change for me). Then I can use this card like a debit card wherever Mastercard is accepted, which is probably just about everywhere. This card lasts 5 years and there aren’t any extra fees except from a small joining fee. I can also withdraw cash like a normal card.
Sign up with a US credit card. Subject to currency conversions, which could be good or bad depending on the situation. Starts building up a credit score.
My question is, what is a credit score good for? I will be intending on going to graduate school, which may or may not be in the US. Would a US credit card or credit score be useful during my four years in California, or does it mainly apply to residents?
Would I be better off with the international card or a US card?
Why not start with a regular US checking account, which will come with a debit card that you can use for in-store and online purchases? That’s what the vast majority of international students do.
Americans are still oddly attached to checks and sometimes insist on payment by check. (Commonly done for rent, for example.) If you don’t have a regular US checking account to write the check on, you’d have to use a less-convenient and more-costly arrangement (such as cashier’s checks). And when someone pays you by check (still commonly done for wages from employment), you might have to pay an intermediary to cash your check if you don’t have a checking account where you can deposit the check for free.
In short, you will want a regular US bank account. Feel free to use a debit or credit card from New Zealand in addition, but do open an American checking account also.
You may not be able to qualify for a US credit card just yet. Many banks will only extend credit to foreigners with a US cosigner. At the very least, you’d need a social security number as well as a steady source of income.
A credit score can be useful even if you don’t plan to apply for loans in the US. For example, many landlords will request a credit report before signing a lease. Utility companies may require a security deposit prior to starting service if you don’t have a sufficiently high credit score. Essentially anytime someone is asked to give you something on a promise that you’ll pay them later, they may want to check your credit score to decide if they want to do business with you.
If you are interested in this card, please read the fine print. Odds are that you are getting a bad deal.
By guaranteeing you a fixed exchange rate, they are assuming a LOT of risk. They will want to profit from that risk and also protect themselves against excessive losses.
One way to profit would be to offer you a comparatively bad exchange rate at the outset. For example, if the official exchange rate is 1 USD = 1.40 NZD, they may sell you 1 USD at 1.50 NZD and purchase 1 USD from you at 1.30 NZD.
The only way to protect themselves from excessive risk would be to limit the transaction volume. Otherwise there’d be nothing to stop you from funneling an unlimited amount of money through this account (and exchanging it back at another bank) should the exchange rates develop in your favor. Depending on how high the transaction limits are, you may need a backup option for unexpected emergencies.
@b@r!um thanks for the info. Since I won’t be signing any leases (I’m living in dorms) or getting a job in the US soon (only F1 visa), probably wouldn’t be using it for that, but you’re right how the bank would want to minimise loss the option 1. I heard Bank of America does credit cards easily for international students, like they don’t need an SSN, so that might be an easy option.
I’m not even sure if I can get a SSN since I won’t have a job in the US or anything.
A credit score would be useful if you’re ever trying a get a loan in the US. Some landlords use it as one factor in who they rent to. Car insurance companies use it as a factor in setting insurance rates. Probably less common, but some employers will even look at credit scores as part of a background check.
Are there any banks you’d recommend? I’m going to UC Berkeley if that helps. There are so many banks in the US it’s a bit overwhelming. Would you recommend looking into smaller banks instead of the massive, big-name ones?
I would recommend Chase College checking account if possible. It has no fee to it. I once had Wellsfargo, but it required to make 10 purchase with a debit card a month to avoid the fee. While it wasn’t a hard thing to do, the fact I ha d to buy something made me realize I was wasting money one way or the other.
Some banks will give you a hard time if you try to open a bank account without a social security number. The international student office at your university can probably point you to banks who have been more accommodating to international students in the past.
Personally, I’d stick to the big national banks. Local banks can be inconvenient if you find yourself having banking needs while out of the area (e.g. a summer internship that pays you by check).
“Soon” being the operative word here. Credit histories are built over many years.
