Checks

While there are many payment methods abroad, a popular option especially among larger transactions is by check. A check, or cheque, is a piece of paper which allows the writer to make a promise to pay another person. Checks are slightly different from the “I owe you” note in that a check actually allows a payee to collect money from the writer’s account. At the bottom of the check is a line of numbers written in magnetic ink. This is called a “micr line,” and is useful as it displays the routing number, account number, and check number of the individual check. This information allows the person who received the check to “cash” or get funds from the check.

Specialized forms of checks include the electronic check, the cashier’s check, and the money order. Money orders and cashier’s checks are also called official items, in that they are guaranteed by the bank or company that produced them. The bank where a cashier’s check is made in effect promises that the check is valid, because they have already been paid for the item. The same is true for money orders. Electronic checks are created when a vendor has been given permission by the owner of an account, either through a contract or verbal agreement, to take funds from their account.

The three numbers at the bottom of any check are the routing number, which in effect gives the electronic address of the writer’s bank, the account number, which gives the maker’s account number at that bank, and the check number, which is the number of checks that the account owner has written up to this point. However, just because someone has written you a check does not mean that there is enough money in their account to pay the check. If someone gives you a check, you should always take it to the bank it is drawn on if you feel it may not be good. The bank that appears on the check will be able to tell instantly if there are enough funds available for the check to be paid, as the check comes from one of their accounts. If you deposit a “bad check”, one that was written without enough money to cover the purchase, into your bank account, you may be subject to fees.


Smart Cards for Students

Ever want to consolidate the number of credit cards, debit cards, and ID’s you have on hand as a foreign student? Now, many colleges and universities are offering another payment method called the Smart Card. Smart Cards for students are being made available through many higher learning institutions and are often incorporated with student’s school ID or room key card, so that students can make purchases, show ID, and gain entrance with one card in hand. These cards are supplied by many colleges and are used to purchase many goods and services on campus or nearby vendors.

Smart cards for students work differently than a credit card or a debit card. Instead, smart cards do not use a magnetic stripe to store information, but rather an integrated computer chip or microprocessor. When the chip is inserted into a vending machine or card on the same network, information stored on the chip is transmitted to the vendor. To put money onto a smart card, the student must insert the card into a payment station, and then insert bills into the machine. Many smart card services have websites which allow the student or the student’s family to put money onto the card online.

These cards are most often used for laundry facilities, vending machines, and small shops on campus. The school’s benefit of offering these smart cards  is that they can limit their services for their students alone. The benefit of using the smart cards for students is that they no longer have to carry coins or cash around to buy small items or use services on their campus.

Additionally, local shops or restaurants often accept payment from university smart cards, allowing students the ability to purchase food or school supplies with their smart card. However, most shops outside of the immediate neighborhood of a university’s campus do not accept smart cards. To buy food or other items at stores that do not accept smart cards, a student will need another payment method at their disposal.


Credit Card v. Debit Card

Should you try to open a credit card or a debit card for use in the United States? Both are great options for making purchases without having to lug around all the cash you plan on using that day. Besides being more convenient, both of these options are safer than carrying physical money around with you in any American city. If your debit or credit card is stolen or lost, you can contact your financial institution to put a block on the card, and many will help you recover any damages in case your card is lost or stolen.

Debit cards are likely going to be the best option for English language students. To further explain, debit cards are tied to a checking account. To use the debit card, you must open a bank account and deposit funds that will be automatically deducted when you make a purchase. Be sure that there are sufficient funds available for each purchase so that you do not overdraft. Debit cards also work in Automated Teller Machines (also known as ATM) which allow you to withdrawing cash. Debit cards may allow you to overdraft your account, in other words spend more money than you have available on your account. This is normally a very costly proposition. Average fees for overdrafts run $35 dollars per transaction, and some banks do not notify you if your account has become overdrawn before assessing such fees.

Should you try to use a credit card to avoid this? If you’re like most English language students, a credit card may not even be an option for you. To be awarded a credit card in the United States, you must have a credit score, which is a record of how well you handle money that you have borrowed. This is tied to your social security number, which is a number that may not be issued. Often, English language students must start with what is called a “secured card,” which is a credit card that you make a deposit towards to ensure your good payment history.


International Wire Transfer

Let’s say that you’ve decided to stay in the United States a little longer than you planned, and you didn’t bring any more money from home to support yourself while you’re living the good life overseas. You could write home and ask for a check, but that could take forever! First, you’d have to wait for the check to come in the mail, then you’d have to wait for your bank to collect the funds from your home bank, which normally takes much longer than it would to release a check. You could have your funds from home stuck in limbo for several weeks! It’s much better to send funds internationally with a wire transfer!

An international wire transfer, or bank funds transfer, is a way to move money without using a check or cash. It’s pretty useful for fabulous ESL students because it allows you to transfer funds quickly from a bank in your home country to a bank in the United States (if that’s where you are studying) – which is one key advantage to opening a bank account in the US. There is never a funds hold placed on a wire because your bank in the United States is actually receiving the funds directly from the overseas account. So how would you go about transferring funds with an international wire transfer? Glad you asked!

To receive a wire, you’ll need three pieces of information. The first thing you’ll need is your account number. This is not the same thing as your debit card number. This number tells the bank back home where your money is. You will also need your routing number, which tells the bank back home where your American bank account is located within the framework of the American Bank. You also will need your swift code, which will tell your bank back home where your account is within the American banking system. It’s similar to an IBAN number, which does much the same thing for European financial institutions.

Happy wiring!