Do you travel abroad often? Or do you intend to do that in near future? Whenever you’re thinking of traveling abroad, you need to read this or else be prepared to feel robbed by your bank because of the charges and hidden fees.
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Whenever you buy something abroad (or at home) with your debit/credit card, four parties are involved: You, your bank, the retailer/merchant you bought your stuff from and their bank. The two banks perform a series of steps to ensure your payment is processed and transferred securely, and it reaches the retailer promptly. When your bank sends your payment to the retailer’s bank (known as the acquiring bank), a small fee is retained. This is called the interchange fee. Similarly, when the retailer’s bank sends the payment to the retailer, it deducts a small fee – this is called the Merchant Service Charge and incorporates a number of component fees such as the interchange fee, costs to cover services provided by their bank. This rate is negotiated directly between the retailer and its bank. All these charges are passed on to the customer which is “You”. You end up paying extra for your purchases or the services.
Below we have listed the charges and hidden fees levied by some of India’s leading banks and other forex retailers.
There are basically three types of charges involved:
1. Foreign Currency Conversion fee – The fee that Visa and Mastercard charge you because your card is Indian and your Card balance reflects in Indian Currency and when you use it abroad, you pay it in the currency of the country you are in. The conversion happens from INR to that currency and Visa and MasterCard automatically charge a 1-2% fee on foreign currency exchange and anything in excess of it is generally a small margin of profit for the bank.
2. Foreign Transaction Charge- Charge that your Debit/Credit card provider puts on you for carrying out a transaction in foreign currency. Your Debit/Credit card is designed to work only in the currency of the country it has been issued in or domestically but when you go abroad and use the card to either shop or withdraw cash, your bank will charge you for that Foreign transaction which makes up for around 2.5 -3.5% figure of the total transaction amount.
3. Cash Advance/Withdrawal Fee – Withdrawing Cash using your Credit card comes with a charge called Cash Advance fee, irrespective of whether you used the card in India or Abroad. The fee, however, is higher when you use your card abroad. And when you withdraw money from ATMs abroad using your debit card, you will have to pay a withdrawal fee. This is the fee that your bank agrees to pay to the bank whose ATM you used to withdraw cash as they allowed the use of their ATMs. You can incur a 1-4% additional fee every time you carry out an overseas cash withdrawal.
Related Post: The Ugly TRUTH About Using ATMs Abroad To Withdraw Cash
Debit Cards and their Charges:
| Provider | FOREIGN TRANSACTION FEE | CASH WITHDRAWAL FEE |
|---|---|---|
| SBI Card | Varies from country to country | Varies from country to country |
| Axis Bank Card | 3.50%+ ST | 2.50-3.50% + taxes |
| HDFC Card | 3.50%+ ST | Rs. 125 + taxes |
| ICICI Card | 3.5%+ST | 125 plus taxes |
| HSBC Card | 3.50%+ ST | 120 plus taxes |
| Citi Bank Card | 2.5-3.5% + ST | 2.5-3.50% plus taxes |
| Standard Chartered Card | Rs 140+0.07%-Rs 770+0.014% | 140 plus taxes |
| Kotak Mahindra Card | 3.50 + ST | 150 |
| BookMyForex Travel Card | Zero | 2 USD |
Credit Cards & the Charges:
| Provider | FOREIGN TRANSACTION FEE | CASH ADVANCE FEE |
|---|---|---|
| SBI Card | 3.50% | 3% or 300 whichever Is higher |
| Axis Bank Card | 3.50% | 2.50% of the total amount |
| HDFC Card | 3.50% | 2.5% (Min: 300) |
| ICICI Card | 3.5% | 2.5% (Min:300) |
| HSBC Card | 3.50% | 2.5% (Min: 300) |
| Citi Bank Card | 3.50% | 2.5% (Min: USD 7.5) |
| Standard Chartered Card | 3.50% | 3% (Min: 300) |
| Kotak Mahindra Card | 3.50% | 300 |
| Amex Card | 2.99% | 2.99% of the total amount |
| BookMyForex Travel Card | Zero | 2 USD |
Note: Foreign Currency Conversion fee: You will be charged a foreign currency conversion fee as well. Visa and MasterCard automatically charge a 1-2% fee on foreign currency exchange and anything in excess of it is generally a small margin of profit for the bank. Foreign Currency Conversion fees is available on VISA and MasterCard websites & is updated regularly.
All the charges are in front of you. All you’ve to decide is whether to feel like getting robbed every time you use your bank’s debit/credit card abroad or save money by buying a BookMyForex prepaid travel card.
Find out how to know about the additional charges:
Your credit card bills mostly turn out to be a stranger as it does not comply with the figure you estimate while spending. So, knowing the junctions at which you pay more can help you save on the extra expenses.
Credit cards issued in India have balance in the Indian currency. But when you make transactions in foreign currency, a Foreign Currency Conversion Fee is charged. For Master and Visa cards the fee is 1 to 2 percent. You can know about the charge from the websites of Visa and MasterCard.
Cash Advance Fee is another additional expense that you incur. This fee is combined with the standard rate that is followed by the bank for cash withdrawal. Foreign Transaction Charge, that accounts for 2.5 to 3.5 percent of the bill amount, is another default expense that accompanies each of the transactions that you make when abroad. This along with the Cash Advance Fee can be known from the issuing bank.
What role does the currency conversion rate play on the transaction day?
When you make a transaction in a foreign currency, you tend to calculate your credit card expense based on the currency conversion rate of that particular day. But unfortunately, it is not how your credit card bill is processed. Merchants usually post your transaction to MasterCard or Visa after a day or two of the actual transaction. And both Visa and MasterCard take into account the exchange rate of the previous day while processing a transaction. This results in a difference between the exchange rate that you thought for your transaction and what is finally taken. In other words, the conversion rate of a currency prevailing on the day of processing a credit card transaction by Visa and MasterCard determines the final bill that you will receive for the transaction.
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