A Student-Travel Cheat Sheet

wsj.com - It is 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.

According to the Institute of International Education, more than 270,000 U.S. students studied abroad in the 2009-10 school year, the latest period for which figures are available. The yearly total has more than tripled over the past two decades and still is growing, despite the sluggish economy.

While Europe remains the most popular destination, more students are heading to places like China, India, Brazil and New Zealand. Others travel to do missionary work, teach or volunteer.

Here are some tips for keeping costs down while young people explore other cultures.

Credit cards. 
In many parts of the world, credit cards are as widely accepted as cash, making them a flexible choice for purchases. But most U.S. banks add foreign-transaction fees of as much as 3% on each purchase, which pumps up your costs, especially if you use your credit card a lot.

American Express, J.P. Morgan Chase and Citigroup offer a handful of 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 with less-than-stellar credit 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, and its interest rates range from 14.99% to 22.99%.

Be wary of merchants who offer to ring up a transaction in U.S. dollars. Typically, they will use a less-favorable exchange rate, meaning you will pay more than you should. And your U.S. card, with its magnetic stripe, might not work at European train stations, which require cards with embedded chips and a personal identification number, or PIN.

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 automated teller machines 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 travelers who use other ATMs will pay $5 plus a 1% currency-conversion fee.

If you plan to change banks anyway, note that credit unions (which often restrict membership), small banks and online banks tend to charge lower fees and some reimburse other financial institutions' ATM fees. For instance, USAA's free checking account charges 1% on foreign debit transactions and reimburses others' ATM fees up to $15 a month.

Even with all the charges, you probably are better off getting cash in the local currency from an airport ATM once you arrive at your destination than converting cash at a bank or currency-exchange desk.

Card-comparison site CardHub.com last year compared currency-exchange rates at 15 banks and found the average total cost was about 8% of the transaction. So even if you pay a 3% fee on a card, "you're still going to be saving money," says CardHub CEO Odysseas Papadimitriou.

Because card companies sometimes block accounts if they see charges that might be fraudulent, you should 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 are outside the U.S. or may impose time limits on coverage, so most formal study-abroad programs include a health plan. If your time abroad is more 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 is covered. Many plans exclude treatment for pre-existing conditions or mental-health issues or reimburse you only after treatment. If so, you will need to be ready to pay cash for your care. Many plans offer emergency medical evacuation, but might transport patients only to the closest "appropriate" hospital rather than bringing them home.

You also might want to see if nonmedical evacuations are covered, such as after an earthquake or amid political unrest. Last year, some insurers chartered planes to get students studying in Egypt out of the country after the uprising there. You can compare plans and terms at websites like Squaremouth.com or InsureMyTrip.com,

HTH Worldwide, which provides insurance to about 100,000 students in study-abroad programs, advises checking your prescriptions before you go. Some common U.S. drugs, such as Adderall for attention-deficit disorder, are illegal elsewhere, so substitutes might be necessary.

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