International Credit and debit cards can be used abroad too, but hidden charges can burn a big hole in your pocket.
Summer is upon us. Mumbai-based Bipin Raje, 65 - retired, is looking forward to his summer holidays in the US. The upcoming trip would be his sixth to the US; he frequently visits his daughter who shifted to the US in 2007. Earlier, ex-banker Raje used to carry US dollars in cash by exchanging from the bank in which he worked. This time, he said he would also carry a foreign exchange (forex) currency card. “I prefer to carry 70% of my amount by the forex card and remaining 30% in cash”, he says excitedly as he gets busy with his suitcase.
Raje says, “Forex card seems convenient…and, at least, I don’t have to carry all that cash in my pocket as I used to before”. Indian travellers have come a long way from carrying those bulky travellers’ cheques and wallet full of cash. Smart travellers have shifted to cards, credit and debit cards and also forex cards.
Forex cards are safe
Forex cards are preloaded cards where you can preload a foreign currency. Then, it works like a debit card. You swipe and pay your amount while traveling abroad or at airports and take a receipt. And, the money from the card gets deducted as and when you spend. Most of the banks including Axis Bank, HDFC Bank, Yes Bank, ICICI Bank and so on offer forex cards. Travel firms and money exchangers like BookMyForex, Unimoni and Thomas Cook also offer forex cards, issued by banks these have tied up with.
Earlier, forex cards were mostly single currency cards. In other words, you could just load your card with a single foreign currency. These days, most banks issue multi-currency cards. You could load many currencies onto your card. Just tell your bank how much money in specific currencies you want to be loaded on your card, and it’s done. “This is particularly useful when you are travelling to multiple countries. Think of a Europe and US trip, with say a layover in, say, Dubai and we’re talking of three currencies already”, says Vinay Bagri, the Co-Founder and CEO of NiYO - a Bangalore-based fintech startup which, partnering with DCB bank, has launched a multi-currency forex card.
HDFC Bank loads up to 23 different currencies on its forex card. Axis Bank’s forex card can come loaded with up to 16 foreign currencies. Standard Chartered Bank’s card comes with 20 foreign currencies. State Bank of India’s forex card comes with eight foreign currencies, and Bank of Baroda’s forex card comes with up to three foreign currencies.
Fill up a form, give a copy of your travel visa and a cheque of the amount (from your bank account) for which you need forex against. These cards are valid for 3-5 years and are reloadable. You can use it for your multiple trips in future.
Here’s where forex cards benefit the most. There are no forex conversion charges that you pay. This is because your currency is already converted before you leave India and loaded on to your card. So every time you spend abroad, you are spending foreign currency, not Indian rupees converted to foreign currency.
But I have my international credit and debit card. Must I really take a forex card?
The short answer is “no”. But, listen to Vishal Garg’s horror story, and you might re-think.
Pune-based Garg, 26, who works in the administration division of a private company went to Singapore with two of his friends in May 2018. He carried some cash (Singapore dollars) and his own international credit card. He just got his new credit card in March 2018 and wasn’t aware of what was coming. So, he happily swiped his credit card at several places in Singapore and came back after his trip was over.
To his surprise, apart from the usual bills he had ran up, his credit card issuer charged Rs 15,000 (approx.) as various other charges.
When you swipe your credit and debit cards abroad, it charges you a foreign currency conversion fee (up to 3-3.5% of each of your transaction value) and a foreign transaction charge (around 2.5 percent to 3.5 percent, again for each of your transaction value). What’s more: every time you withdraw money from ATMs abroad using your debit/credit card, you will have to pay a withdrawal fee (1 percent to 4 percent of the amount withdrawn) to the bank. Nitin Motwani, the founder and CTO of retail forex marketplace for foreign currency exchange, BookMyForex.com, explains, “This is the fee that your bank agrees to pay to the bank whose ATM you used to withdraw cash as they allowed the use of their ATMs.”
Sapna Tiwari, the co-founder and COO of Rupeewiz Investment Advisors, says, “Avoid using credit cards abroad since there are multiple charges attached. Instead rely on forex (travel) currency card issued from the banks / foreign currency dealer. However, you should carry this international cards for any uncertainty / emergency situation in foreign country. Since, it will be easily accessible.” It’s important to know the charges and exchange rates that will be levied before you use them.
What if you lose your forex card abroad?
First, you need to inform the issuing bank immediately (through phone or email) and ensure that your card is blocked. File police first information report (FIR) at the nearest police station abroad, scan and email the proof to your bank back in India. Then, bank-transfer the balance of your primary card from your primary (lost) card to the duplicate card.
Some banks prefer to courier you the new forex card if your main card gets lost or stolen. For instance, RBL bank reissues the new card and mails it to the international destination. It activates the new card once the receipt is confirmed by the user. This forex card is a co-branded card with Thomas cook. Here, the back-end operations are handled by Thomas Cook if the card is lost or stolen. It takes three to four days to deliver the new forex card if the main card is lost or stolen in South East Asia and Middle East. To deliver in Europe and USA, it takes five to seven days.
The card will be delivered on the address the traveller provides as per his itinerary and plans for accommodation during the move. Before handing over the duplicate card, id proofs are verified by the courier person. Thomas cook courier the cards to international addresses through Blue Dart or Aramex courier services.
Some banks also give you a duplicate forex card that you can activate if your primary card gets lost or stolen. But, ensure that you carry your bank’s call centre number while travelling abroad so that getting in touch is quick and easy. So, the balance in your primary card gets transfer to duplicate forex card after a call.
Does that mean you do not carry any cash abroad?
We always suggest you carry some cash abroad. Kailash Gupta, the senior vice president and head – Payment Solutions & MTSS, Thomas Cook India, says, “Travellers should carry 90% of their forex requirement on forex cards and the remaining 10% in cash. It’s good to have some foreign currency in cash while travelling aboard since it comes handy to pay for immediate expenses like food, cab service, etc.”
Remember, for smaller payments abroad, you might still need lose change and currency. So, we suggest you carry about 30-40 percent of your currency in cash, and keep the rest in your forex card.
Remember to keep a receipt of the cash you get from your money exchanger.
Travellers’ cheques are passé, and travel experts don’t really recommend these anymore. These are foreign currency-denominated cheque-like leaves that you buy, which you can then exchange for hard cash abroad. But, apart from the hassle of finding a money exchanger who will exchange your traveller cheques for cash, these leaves also come denominated in a very few currencies like US dollars. Hence, those don’t work in all countries.
On your international holiday, we highly recommend you to carry a multicurrency or single currency forex card, according to your travel itinerary. Also, carry a lesser amount of cash currency to use it for contingency purposes.
Carry your international debit/credit card to swipe in case of emergencies. However, it is important to inform your bank of your overseas travel plan with the debit/credit card in advance. It will be helpful in case the card is stolen or fraud transactions are recorded while travelling abroad. Banks can take prompt measures if a fraudulent trend on your card is observed while travelling abroad.