Travelling abroad is fun as you discover new places, cultures and food. Technology has made it very easy and seamless to move across borders and spend money. Travellers now have much more and much better options to manage their forex requirements when they travel outside the country. Let’s look at the 4 most popular options to pay while you are vacationing abroad
- Credit/Debit Card
- Travel Card
- Forex from local forex dealer
- Travellers cheques
This is the most seamless way to do it. You don’t need to do anything. You can just swipe your current card across the world to make payments.
The vendor charges you in the local currency. The credit card issuer will convert that into Indian Rupees (the currency of your credit card/debit card) using the lowest exchange rate of the day. For example if you are visiting Thailand and the exchange rate ranged from 1 THB = 1.78 – 1.80 INR during the day then the bank will apply 1 THB = 1.8 INR on the transaction. The exchange rate is better than what you can get from money changers.
Fees and other charges
- Banks typically charge around 3% foreign transaction fees. This applies for all transaction that are done in a foreign currency on your card. It varies by bank and by card.
- Banks also charge ATM withdrawal fees if you withdrawing from a ATM in the foreign ATM. There are some cards which do not charge this but the bank which owns the ATM still charges you a fee.
There is also cash advance if you are using your credit card for cash withdrawal. The interest rate on this is also usually high. Your credit card can also help with improving your CIBIL/credit score?
Most banks offer their own travel cards now. There are also specialized travel card providers like Weizmann and BookmyForex. They are usually multicurrency so you can hold a balance in several currencies at the same time. The exchange rate is fixed when you load the card. You can convert the balance to INR anytime.
Very low hassle as you do not have worry about the exchange rate every day. You also get a back up card that is not activated. You can activate and use this if you lose the original card while you are travelling.
You need to load the required amount in foreign currency on your card. You can do this online by transferring the amount from your bank account. The exchange rates are better than what the money changers would charge. You can load multiple currencies on the same card and use it for travelling to several countries.
Fees and other charges
- No transaction fees for using the travel card for purchases. Just ensure they charge you in the local currency.
- Some travel cards charge ATM withdrawal fees. This is on top of the ATM fees the host bank would charge all users. Some cards charge a certain fee for ATM withdrawals. Always go with a card that has the most number of free withdrawals if everything else is same.
- Some travel cards also charge for loading, activation, duplicate card activation etc. Typically they are not very transparent about a lot of these charges. It is very difficult to find info about these fees and charges online.
- If you have balance in foreign currency left on your travel card and want to withdraw in Indian Rupees (home currency), the exchange rate is bad. You will find that the return exchange rate on currency notes is better than on the card.
Foreign currency notes
The most obvious choice for a lot of travelers is to buy some foreign currency from a money changer.
Currency notes are accepted everywhere and preferred to cards by most of the vendors. It is easy to convert them back to your home currency if you have any left.
The exchange rate varies greatly depending on where you are changing the money. The worst place to change is the airport. You get a very bad exchange rate. Only use an airport exchange and in an emergency and only for the amount required for the emergency.
Online sites offer better rates than most big brand forex traders. Check bookmyforex.com, doorstepforex.com to compare rates. You can schedule a convenient home delivery/pick up.
Some of the online traders may require an upfront payment before they send a person with the currency. This can be risky and should be avoided if possible. Especially if it is a new vendor you are dealing with for the first time.
Fees and other charges
The best part of currency notes is that there is no other fees. You exchange your home currency at a fixed rate and you get the foreign currency. No other fees.
The downside with currency notes is that it is a hassle to carry it around. Especially if you are used to spending with your credit/debit card.
There is no protection if it is stolen. Travel cards and Credit cards can be blocked immediately to limit your loss. But with cash, it is lost if it’s lost.
The most important thing to note about Traveller’s Cheques is –
“Do not get traveller’s cheques unless you are an antique collector”.
They had their day but the travel cards have them beat on all fronts now.