Travelling โAbroad? Why Credit Cards Often Beat Cash & Forex Cards
When travelling internationally, the best way to manage your finances isn’t always what you think. โขWhile cash and forex cards have their place, credit cards are increasingly proving to be a โsmarter, more rewarding option for many travellers.
Credit Card Advantages: Lowโ Markups & โRewards
Several credit cards now offer โsignificantly lowerโฃ foreign exchange (forex) โฃmarkupsโข thanโ conventional options. The HDFC Bank Infinia card,for example,charges just 2% plus GST on โฃinternational transactions. Axis Bank’sโข Olympusโ card goes even further, with a markup ofโ only 1.8% plus GST.
HDFCโ Bank โฃcardholders can also benefit from the Global Value program, โขcosting Rs. 500 annually (fully offset by equivalentโฃ bonus โคpoints). This โฃprogram provides 1% cashback on โคforex transactions, up to Rs. 1,000 โper month.
For those seeking to avoid forex chargesโค entirely, cards likeโ the RBL Bank World Safari, Scapia, โIDFC Bank โMayura, and Ixigo โคAU Bank cobranded cards offer โคzero foreign exchange fees. Even cards with higher markups, such as the American Express Platinum Metal card (3.5%), โคcan be โฃbeneficial โdue โฃto their โคgenerous rewards programs – offering triple points on all international spending.
Avoid Dynamic Currency Conversion (DCC)
When presented with the option toโ payโ in yourโฃ home currency (INR) or the โคlocal currency at international terminalsโข – a practice โฃcalled Dynamic Currency Conversion (DCC) – always choose to pay in the local currency. DCC ratesโ can be up to 8% higher than theโฃ standard exchange rate, effectively โcosting you 4% more than a 3.5% forex markup plus GST. โข
Moreover, many Indian banks now add an โฃadditional 1% markup plus โGST whenโข you use โขDCC. You also forfeit the enhanced โคrewards offered by cards like American โExpress Platinum and Axis Olympus โfor foreign โคtransactions when opting for DCC.
Cash Considerations & Alternatives
Despite the benefits of credit cards, cash remains essential in some destinations.However, carrying large sums of cash presents risks and doesn’t earn interest.
For situations โwhere cash is necessary, consider bank accounts offering fee-free international ATM withdrawals.indusind Bank, forโฃ instance, provides accounts โallowing cash withdrawals abroad without โextra charges. This can be a lifesaver in cash-dependent countries and eliminates the need to bring back leftover currency. If youโ doโ find yourself with excess cash, utilizing it to settleโฃ yourโ hotel bill before departing is a practical solution.
Avoid โairportโ forex counters, as their exchange rates are typically exorbitant.For traditional forex โขconversion, BookMyForex.com and other โprimary conversion agents offer more competitive rates.
Forex Cards: A Nicheโข Use Case
Forex cards can be useful in specific scenarios, such as when provided by an employer for โฃbusiness travel or for extended โขtrips where a secure method of carrying funds โขis desired. โข
When using forex cards, its advisable to choose cardsโ with your name engraved on them โ(as many areโ issued without personalization)โข and, if possible, obtain the โcard from a โคbankโค whereโ you already hold an account forโค easier currency reconversion upon your return.
(The author is โคfounder and editor livefromalounge.com)
