Before you travel abroad for your studies, it’s important you know about the various options available to you to either carry money or send money abroad. Here’s what you need to know:
Use Prepaid Forex cards
A convenient and secure way to carry or send money abroad. All leading banks and some non-banking financial companies in India offer prepaid cards. “It is the most economical and safe way of carrying Forex abroad. Prepaid cards come with a chip and pin, making it safer than other instruments,” says Sudarshan Motwani, Founder and CEO, BookMyForex.
Some organisations charge a nominal fee of Rs 100-250 for issuing the card while others offer it for free. Prepaid cards are useful for daily living expenses, shopping, booking flight tickets, etc. Some colleges also accept fee through these cards. Swiping of prepaid cards at a merchant point of sale terminals does not attract a fee.
Also, you can lock in the exchange rate before you travel overseas. “The applicable forex rate is the one on the day of purchase of the prepaid card,” says Motwani. Parents can top up the balance on the prepaid cards as per need.
The downside to these cards is that countries including the UK, the US, Canada and Australia allow for limited withdrawals – around Rs 20-40,000 – from ATMs in one go. Some banks may also charge a fee for withdrawals.
Foreign Currency Demand Draft (FCDD)- the Best way to send money abroad
Foreign currency demand draft (FCDD), which costs Rs 300-500, is one of the most efficient ways to carry out forex transactions. Using Foreign Currency Demand Draft to send money abroad is the cheapest option. “It saves intermediary bank charges, and the amount is directly deposited into the beneficiary’s bank account,” says Motwani. FCCD is valid for six months and you can encash at the beneficiary bank anytime during that 6 month period.
It is best used for payment of university and hostel accommodation fee. Bear in mind though, it takes nearly two weeks to credit the money into the payee’s account via FCCD. When the payment has to be immediate, you should not use a demand draft. Many universities are now recommending the alternate mode of payments to pay the fees since FCCD takes time. Also, in case of damage to the instrument (demand draft), the refund process is long and cumbersome
Use Wire transfer to send money abroad
Wire transfer is the fastest way to send money abroad. You can use a wire transfer for a variety of payments – college application fee, tuition, hostel fee, etc. Transferring money abroad through Wire Transfer approximately takes 24-48 hours. You are also given a reference number of the transaction so as to keep track of it.
Wire transfers may incur commission charges from both the sender and the receiver banks.
Among the oldest options, Traveller’s cheque (TC) is a secure way of carrying out forex transactions. TCs are available in all major currencies. If someone steals your traveller’s cheque or you lose it, no one will be able to use it. They also offer better exchange rates than cash.
Travellers Cheques also do not have an expiry date. The downside is that you can encash traveller’s cheque only at a limited number of authorised dealers. “Also, if there’s a signature mismatch, traveller’s cheques get void,” says Motwani.