Compare forex cards on total costs and complete transparency in charges

A card with zero cross-currency conversion charge will allow you to load US dollars and then spend in any currency without incurring further charges

Thomas Cook India has relaunched its One Currency Card with zero forex markup and zero cross-currency conversion charges. Travellers can preload US dollars, lock in the exchange rate before departure, and spend in other currencies without paying an additional conversion charge. While these features can lower spending costs overseas, buyers should examine a number of other aspects when selecting a forex card.

 

Zero markup

 

Forex markup is an additional charge over the prevailing interbank exchange rate. Eliminating it can reduce the cost of loading foreign currency onto a card. “This translates into immediate savings at the time of loading the card,” says Deepesh Varma, chief business officer–foreign exchange, Thomas Cook (India).

 

The markup can form a significant part of the cost of buying foreign exchange. “Forex markup generally ranges from 0.75 per cent to 2 per cent, depending on the provider, currency, and transaction value. The average is typically around 1.5 per cent,” says Varma.

 

Currency conversion charges

 

A cross-currency conversion charge generally applies when a traveller uses a card loaded in one currency to make a payment in another.

 

“When a customer pays in a local currency using a USD-denominated card, a cross-currency conversion charge of 2 to 4 per cent may typically be applicable,” says Varma.

 

A card with zero cross-currency conversion charges allows the customer to load US dollars and use the same card across several destinations.

 

The customer does not have to load a different local currency before each international trip, or load several currencies for a multi-country journey. “Combining an exchange-rate lock with zero cross-currency charges can reduce the cost of multi-country travel,” says Vishal Dhawan, chief executive officer (CEO) and founder, Plan Ahead Wealth Advisors.

 

Benefits beyond carrying cash

 

A forex card reduces the need to carry cash. Since travellers preload it, the card allows them to lock in the exchange rate before departure.

 

“This is beneficial when the rupee is expected to depreciate. It protects the traveller from exchange-rate movements during the trip,” says Dhawan.

 

Forex cards also offer more competitive exchange rates than most debit or credit cards. “Many debit and credit cards levy forex markup or cross-currency charges of around 3.5 per cent plus applicable taxes,” says Gagan Malhotra, chief operating officer, BookMyForex.com.

 

Forex cards also have a few limitations. A traveller may need to contact the provider to reload a depleted card. A lost card carrying a substantial balance could be misused. “The risk arising from a lost card may be lower in a credit card,” says Dhawan.

 

Compare the exchange rate

 

A low forex markup should be among the first features a buyer examines. “The exchange rate should be as close to the mid-market rate as possible and the pricing should be transparent,” says Taneia Bhardwaj, South Asia expansion lead, Wise.

 

Travellers should assess the spread. “A spread of around 1 per cent is reasonable. Around 1.25 per cent may be acceptable in cases where the card offers greater convenience,” says Dhawan.

 

Zero cross-currency conversion charges are especially useful for multi-country travel. Travellers who expect to withdraw cash frequently should avoid cards with high cash-withdrawal charges.

 

Bhardwaj suggests comparing the total cost of obtaining a card from a provider. “Multiple charges for loading, cross-currency usage, or inactivity can make a forex card expensive,” she says.

 

Some cards impose dormancy fees after three, six, or 12 months of non-use. Evaluate dormancy charges based on how frequently they expect to use the card.

 

Check currency support

 

The card should support the currencies the traveller is likely to use. “It should allow spending in a local currency even when you do not already hold it,” says Bhardwaj.

 

Wide acceptance is also important. The card should work at merchants, restaurants, hotels, and ATMs at the destinations on the itinerary. “Acceptance on a globally recognised payment network improves reliability,” says Varma.

 

Check digital features

 

The digital onboarding process should be simple. App-based controls should allow the traveller to manage the card easily. The reload facility becomes particularly important when the traveller is overseas. “Instant reloads can help travellers add funds digitally while abroad,” says Malhotra.

 

Real-time spending notifications improve transaction visibility and help users spot unauthorised activity. The card should also provide effective security controls. “The user should be able to lock and unlock the card instantly, and enable or disable transaction channels,” says Malhotra.

 

Emergency assistance is useful if the card is lost, stolen, or compromised. Buyers should also examine the insurance protection provided with the card. “Some cards provide insurance against counterfeit transactions, skimming, phishing, and unauthorised usage,” says Malhotra.

 

Charges issuers levy

 

●    Exchange rate markup: Varies, 2-4% among traditional providers

 

●    Currency conversion fees: Often around 3%

 

●    ATM withdrawal charges: Varies, commonly around US $2 (or equivalent) per withdrawal

 

●    Card issuance fees: ₹300–500

 

●    Card reload fees: ₹75–100 per reload

 

●    Card replacement fees

 

●    Inactivity or annual fees: Typically charged after 12 months

 

●    Charges for closing the card or withdrawing the remaining balance

 

Source: Wise 

 

Security tips you should observe

• Never share card details, the automated teller machine (ATM) PIN, one-time passwords (OTPs), or other security credentials
• Keep the forex card in your possession while making payments
• Prefer chip-and-PIN transactions to magnetic-stripe transactions
• Enable transaction alerts and monitor card activity regularly
• If the card is lost or stolen, lock it immediately through the app and contact customer support to block it

Source: Bookmyforex