DCSIMG

What to do when a student gap year beckons (Part 2)

Student jobs will be even more scarce on the ground here this summer and many young people will be hoping to find work abroad. For parents, this is a rite of passage they may have taken themselves back in the 1970s or 80s, with the UK and the US their most popular destinations. For this generation there’s no geographic limit to where they will seek work or take a gap year and global banking services in the form of ATMs and on-line banking facilitate this.

Last week I highlighted some of the health and travel insurance issues that you and your travelling child need to address before they go away. Ordinary family multi-trip policies are unsuitable a) if you child is over 18, b) if their trip lasts longer than 30 days and c) if they are going to be taking part in what the travel companies describe as “hazardous” activities. These may have to be listed separately at an additional cost. Cash excesses apply for nearly every claim.

On the health insurance side, emergency cover on our domestic policies is also limited to 30-45 days though VHI and Aviva both have separate global policies that can cover longer holidays, but they’re expensive and when your student/child returns to college and wants to rejoin the family plan, any of their pre-existing medical conditions will be taken into account and the five year (typically) exemption period will apply. (This is why many parents do not drop them from the family plan.)

Health insurance policies only cover emergency events anyway and benefits are only paid if the member is kept overnight at the hospital or clinic. Day treatments – no matter how extensive or serious (like a broken limb) - are not covered by the emergency global cover on your VHI, Aviva or LAYA policy (LAYA is the new brand name for Quinn Healthcare.)

Ideally, speak to a good insurance broker to ensure they are properly covered with the right travel and health insurance policy.

Banking/Money

Meanwhile, on the money front, what should your student/child be doing about their banking or money transactions?

Those going to Europe to work or travel may want or need a bank account where their wages, however irregular, will be deposited, either electronically (by their boss) or manually.

If they already have an Irish account, their Eurozone employer can IBAN the money into it quickly and cheaply and the young person can seamlessly keep using their existing debit or Laser card to make purchases, ATM withdrawals and deposits.

For kids travelling or working in non-Eurozone countries, where they are less likely to open their own bank account and where it will cost too much for employers to deposit their wages electronically, I think the new money cards are a secure and convenient addition or option.

Issued by the big credit card companies, they act like a credit card in that they can be used wherever Visa or Mastercard are accepted – shops, restaurants, on-line retailers like airlines and other transport authorities and at ATMs. Where they fundamentally differ is that they pre-paid and do not provide any credit or the huge interest costs associated with credit cards.

The security features of the money cards are also important for everyone’s peace of mind: the card can be topped up by the owner (the young person from their own on-line bank account) or by a third party – mum and dad. (Parents can also check the balance on the card at any time so long as they have the customer code.)

The young person meanwhile can only spend what is on the card at any time – a good incentive to stick to weekly spending budgets, especially if, say, the card is only being topped up once a month.

The initial cost of the O2 Card, which I will be getting for my son who is planning a gap year, is €4.99.The maximum top up amount at any given time is €350 and there is a small charge per top up (based on the amount) of between 80c and €2.99. There is a €1 ATM withdrawal charge in the Eurozone and a 2.75% charge for withdrawals and purchases outside of it, so they do not want to be withdrawing small amounts of cash too frequently.

Lost or stolen moneycards are treated just the same as a Visa card – you contact the company and they suspend the card right away and send a replacement (and new PIN) as quickly as possible. (See www.02online.ie for details or checkout out the list of cards on www.moneyguideireland.com.)

Though your 18-20 somethings will object to your mentioning this, make sure they are fully aware of the security issues around using any kind of plastic card and how they could be held liable for unauthorised withdrawals or payments if they give out their PIN or lend their card to anyone. Also, make sure they are aware of the different card scams.

If your child is using only a debit card while there are away, it isn’t a good idea to leave substantial cash balances in this account (theirs or yours): it’s been known for travelling students to be forced by thieves to withdraw everything in the account over the space of a couple of days.

Debit cards are still ‘safer’ than credit cards in that only what is in the account can be stolen, but it’s better for them to email or phone you (collect) to put another tranche of money into the account than to leave it all there from the start.

Finally, make sure you have a safe copy of all the appropriate bank and card account numbers (including IBANS) and passwords. Photocopy or scan passports, travel and health insurance documents, flight tickets. These can also be emailed to your child’s computer or smart-phone so they have immediate access too.

 

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