Forex or credit card? The better option for Indians travelling abroad

A forex card should be for most expenses and credit for emergencies or big-ticket items, say finance experts

Many Indian travelers are planning to spend their summer vacation abroad, flocking to places as varied as the Swiss Alps or bustling New York City. As they pack their travel bags, they have two options to make payments abroad: Forex or credit cards.

 

Forex card

 

Forex cards are prepaid and designed for international travel. They can be loaded with foreign currency before departure, allowing travelers to avoid fluctuating exchange rates while abroad. One of the primary advantages of forex cards is that they lock in the exchange rate at the time of loading, providing predictability in spending.

 

 

A credit card, on the other hand, offers convenience and flexibility. You do not need to preload it. You can pay in multiple currencies. Plus, you earn reward points and enjoy benefits like travel insurance and airport lounge access. However, it may incur some charges such as foreign transaction fees, currency conversion etc.

 

“If you want cost control and fixed exchange rates, go for a forex card. If you prefer flexibility and perks, a credit card may suit you. Ideally, carry both. A forex card for most expenses and a credit card for emergencies or big-ticket items. This balance can give you financial ease during your travels,” said Adhil Shetty, chief executive officer of Bankbazaar.com, a fintech company.

 

Foreign transaction charges - Forex card 

 

Charge Type	Fee Details
Issuance Fee	Rs 500 – Rs 1,000 + GST
Reload Fee	Rs 75 – Rs 100 per reload
Cross-Currency Conversion Fee	3.5% of the transaction amount
ATM Cash Withdrawal Fee	USD 2 – USD 4 per withdrawal
Balance Enquiry Fee	USD 0.50 – USD 1 per check
Lost Card Replacement Fee	USD 3 – USD 20 (higher internationally)
Inactivity Fee	USD 5 – USD 10 per month (if unused for 6-12 months)
Card Closure & Refund Fee	Rs 100 – Rs 300 + GST

  Note: These details are indicative and may be subject to GST. Exact fees may vary depending on the bank and card variant. Check the official bank website before international transactions.  Source: Bankbazaar.com

 

Foreign transaction charges – Credit cards

 

Charge Type	Fee Details
Foreign Transaction Fee	1% – 3.5% of transaction value
Dynamic Currency Conversion Fee (DCC)	1% + taxes (if billed in INR overseas)
Cash Advance Fee	2.5% – 3.5% of withdrawal amount
Interest on Cash Withdrawal	2.5% – 3.5% per month (up to 42% p.a.)
Over-Limit Fee	2% – 3% of over-limit amount
Late Payment Fee	Rs 100 – Rs 1,200 (based on outstanding balance)
Balance Transfer Fee	1% – 2% of transferred balance

  Note: These details are indicative and may be subject to GST. Exact fees may vary depending on the bank and card variant. Check the official bank website before international transactions. 

Source: Bankbazaar.com

 

Security fraud protection:

 

“You should also consider the security aspects of the two options. In case of fraud, blocking a credit card is generally more straightforward. Since you are using borrowed money, your financial impact will be less severe. All you need to do is inform the bank and block your credit card,” said Animesh Hardia, senior vice-president at Quantitative Research at 1 Finance, a personal finance advisory firm.

 

“With a forex card, it will take at least a few days to prove a fraudulent transaction and recover your money. However, getting another Forex card is usually easier, particularly app- based ones. On the other hand, getting a replacement for a credit card can be time consuming,” said Hardia.