Forex Card or Cash? Credit card or Debit card? What should you use when abroad? What’s the cheapest and most convenient option among these? These are the questions that hover around before anyone leaves for their trip abroad. The answer is simple — do a little research first!
In the past, Traveller’s cheques or currency notes were the most popular ways to carry money when traveling abroad. Cash is still a viable option, but you now have the option of using Forex cards, and debit/credit cards to make payments overseas.
So the question is what’s the best option for you? To find out the answer, let us dig a little deeper!
Why is a Forex Card a better option for traveling in comparison to an International Debit/Credit Card?
A majority of people prefer to use a debit/credit card abroad, believing that it is the most convenient and the best way to make payments abroad. Such notions stem from a lack of awareness about the hefty service charges that are associated with debit/credit cards. For most practical purposes, travelers would be better off carrying a prepaid Forex card that can be used to pay in the country’s local currency. The card has so many exclusive features & benefits that make it far superior to credit/debit cards in every way. For a more detailed take on this, read further.
What is a Forex Card?
Forex cards are prepaid foreign currency-denominated cards in which one can load actual foreign currency at a locked-in rate. One of the main benefits of forex cards is that, unlike credit/debit cards, they allow you to lock in the forex exchange rate at the time of loading.
What really sets forex cards apart is that one can load foreign currency on these cards at the interbank rates, the live & most transparent exchange rates. Therefore, travelers can convert INR into foreign currency without losing any money at all as the conversion happens at zero markups over the base interbank rates.
How does a Forex Card Work?
A Forex card, also known as a travel card or a prepaid card, is a convenient and secure way to carry foreign currency while traveling abroad. It works similarly to a debit or credit card but is specifically designed for international payments and you can load foreign currency in it. Multiple currencies can also be loaded onto the Forex Card at once.
Once the card is loaded, you can use it to make payments or withdraw cash in the local currency of the destination country. You can even reload the card if you run out of funds. Additionally, the exchange rates remain locked in irrespective of how the INR performs against foreign currencies.
What is an International Debit/Credit Card?
An international credit/debit card is a rupee-based card linked to a savings account and accepted in the majority of countries worldwide. Today, many banks & fintech companies claim to charge 0 forex markup on their credit cards.
This, however, can be a little misleading as these cards are marked up by about 1% since the rates offered are not real-time inter-bank rates but static rates offered by networks. With a credit/debit card, currency rates are also not fixed. The exchange rate would vary for each transaction at a merchant location, i.e., when you swipe your card.
How Does an International Credit/Debit Card Work?
Credit/Debit cards are loaded in INR, which is then automatically converted into the local currency of the country you’re spending money in. Opening a savings account with a bank is a prerequisite for using the card, which can be a hassle since most other travel card instruments do not require opening an account.
Recent media reports claim that a few banks are not allowing customers to make payments exceeding the outstanding amount or refunding excess funds, which happens frequently when using credit cards for international travel. So, rather than choosing a credit instrument, it is advised to choose an instrument like a forex card which is covered under the Liberalized Remittance Scheme (LRS).
Comparison Between a Credit/Debit Card and a Forex Card
A complete comparison of a typical Forex card and a credit/debit card is provided below, keeping both the practical and theoretical aspects in mind.
Card Issuance Ease
A Forex Card can be activated within 4-5 business hours as it is an instant prepaid instrument designed specifically for foreign travel. Only basic travel documents are required to book your Forex card online. 24*7 online booking and same-day delivery is available. It is not required to open a new account.
Credit/Debit cards can only be obtained after opening a new account with a bank. The bank would require you to complete a KYC verification process. It may also take up to 7-10 days to receive the actual physical card from the time of KYC verification. Savings account terms and conditions will apply, including dormancy rules, maintaining balances, etc.
Using a Card Abroad
Both forex cards and credit/debit cards are accepted abroad, but before you decide, you should consider this important factor. Credit/debit cards are rupee-based cards, so the online payments in foreign currencies will be processed after the INR balance on your card is converted to foreign currency, so you will be charged for currency conversion.
Your bank may also charge you network service fees of roughly 1% when you use your credit or debit card overseas, depending on the international card network to which it belongs. It is recommended to carry a Forex card instead, as they offer the best exchange rates with minimal costs. Whether you are shopping or dining, you can use your Forex card abroad without worrying about high fees.
Volatility in the Rate
A Forex card offers protection against rate volatility. Once you load money onto a Forex card, the rate is locked. You are certain about the conversion rate you are paying with a Forex card. Thus, using forex cards when traveling abroad eliminates the lack of transparency associated with foreign exchange-related charges on a credit or debit card.
Credit/debit cards, do not offer protection against volatility as the currency rates are unclear. The INR exchange rate keeps fluctuating against foreign currencies. The rates are applied when a transaction is made at a merchant location, i.e. when you swipe your card. As a result, whatever the prevailing rates are at that point will apply.
Theft or Loss of a Card
If your credit/debit card is lost, you will have to report it to your bank in India on their contact number immediately. Once you return to India, you may have to submit a written request again to get a duplicate card. After that, the bank will decide whether to issue a replacement card. In the event of card loss, the response from banks isn’t ideal, and there is room for improvement.
In most cases, forex cards come with a backup or add-on card evidently within the same kit or can be opted for while buying a new card. In case you lose a card abroad, requests can easily be placed by calling or emailing and replacement cards can reach you abroad within 3 working days.
Mark-up Fee & Other Charges
It is not well known that forex cards are based on live interbank rates while credit/debit cards are based on static rates by networks. The inter-bank rate is the rate that banks use to transact with each other for larger amounts and is the best rate. Although a few banks claim to offer credit/debit cards with no markup fee, the cards are still marked by up to 1% higher than interbank rates. On the other hand, some online platforms like BookMyForex are offering forex cards at interbank rates with zero forex markup.
Listed below are all the other charges you should be aware of:
| Fees & Charges | Forex Card | Credit/Debit Cards |
|---|---|---|
| Markup fee | 0 | 1-3% markup |
| Issuance Fees | 0 | INR 500-1000 |
| Annual Fee | 0 | INR 750-1000 |
| Inactivity Fee | 0 | 0 |
| Reissue of Lost, Stolen, or Damaged Card | INR 250 | INR 100-200 |
| Initial Funding requirement for card issuance | 0 | INR 5000 |
| Balance Enquiry Fee at International ATM | 1 $/eqv | INR 100 |
| International ATM Cash Withdrawal Fee | 2$/eqv | 3.5-4% of the withdrawn amount |
| Interest Rates | No interest as it's a prepaid card | 24-36% Interest charged on unpaid balances |
Withdrawal Limit
Both credit/debit cards and forex cards offer similar withdrawal limits. As far as the withdrawal limit is concerned, neither of them has any specific advantages over the other.
However, note that with a Forex card, you are charged a minimal flat withdrawal fee. When you use your debit or credit card to withdraw money, the fees may go up to 4% of the transaction’s value.
| Withdrawal Limit | Forex Card | Credit/Debit Card |
|---|---|---|
| ATM cash withdrawal | $ 1000 (equivalent) | INR 1,00,000 |
| POS Transactions | $ 7500 (equivalent) | INR 7,50,000 |
| Contactless payments | $ 40 (equivalent) | INR 5,000/Transaction |
| Online Transactions | $ 7500 (equivalent) | INR 7,50,000 |
Management of Expenses/Control of Transaction Costs
A forex card is loaded with the local currency of the country where it is used. Thus, you have complete control over each transaction and your overall spending. In the case of credit/debit cards, because the currency in INR is being spent overseas, it will take a lot more effort to determine whether the actual conversion rate was good, bad, or very bad.
In this case, you would need to record the time of each spend and then figure out what the conversion rate was at the time of the expenditure, which is often when the Indian markets are closed. Overall, both cards notify you any time you make a transaction so you can keep track of expenses easily.
Card Security
Forex cards are top-notch when it comes to security and safety. By logging in to the mobile app of your Forex card provider, you can easily lock or unlock the card without any hassle. You can also set a daily transaction limit to reduce risk. The Forex card also comes with an insurance cover to protect against lost card liability, skimming, phishing, counterfeiting, and internet banking fraud.
A credit/debit card is also chip and pin secured, and you can temporarily lock/unlock it for both domestic and international transactions. It also comes with a complimentary insurance cover. Thus, they both have similar advantages in this respect.
Card Closure Ease
You will have to visit the bank to complete the formalities. Only a few banks offer customers the option of raising the card closure request online. To raise an online request, you need to visit the bank’s website, fill up the form, and submit the request. Once the request has been made, a representative of the bank may get in touch with you.
The process of closing a Forex card is quite simple. You can simply send an email to your forex provider. Make sure to mention the card number and the fact that you wish to unload the Forex card. The balance of your Forex card will be converted and deposited into your bank account number.
Rewards and Offers
Alongside the primary purpose of facilitating foreign currency, forex cards provide additional perks. These cards offer a range of benefits, including free international SIM cards, and exclusive offers on dining, travel, accommodation, etc., ensuring a pleasant and cost-effective travel experience.
Credit/debit card issuers have loyalty programs in place and reward cardholders with points for every transaction. These points can be redeemed for various benefits such as discounts, gift cards, travel vouchers, and more.
Forex Card vs International Debit/Credit Card – The Choice is Yours
| Parameters | Forex Card | Credit/Debit Card |
|---|---|---|
| Card Issuance Ease | Yes | No |
| Using Your Card Abroad | Yes | Yes |
| Zero Rate Volatility | Yes | No |
| Simple Process for Replacing a Lost or Stolen Card | Yes | No |
| More Reasonable Fees and Charges | Yes | No |
| Better Withdrawal Limit | Yes | Yes |
| Efficient Expense Management | Yes | No |
| Better Card Security | Yes | Yes |
| Card Closure Ease | Yes | No |
| Amazing Rewards & Offers | Yes | Yes |
Reasons to Buy an International Debit/Credit Card?
Here are a few reasons to consider buying a credit/debit card for international travel:
- Widespread acceptance around the world. Cards accepted by millions of merchants, ATMs, and online platforms in various countries
- Convenient to use. Simply swipe or insert your card and complete your transactions seamlessly
- Equipped with advanced security features. Ability to track your transactions and report any unauthorized charges promptly
- Comes with attractive rewards and benefits like cashback offers, loyalty points, complimentary airport lounge access, and travel insurance coverage
- Do not come under the purview of the LRS so you won’t have to pay any Tax Collected at Source (TCS) for international transactions
Who Should Buy an International Debit/Credit Card?
You can perhaps buy and use an International debit/credit card abroad if you are going there for a very short period of time, and if exchange rate fluctuations are not a significant concern for you.
Reasons to Buy a Forex Card
Here are some of the amazing reasons why Forex cards are ideal for individuals traveling abroad:
- Purchase a Forex card online from the comfort of your home and load it in a foreign country
- The card allows you to load multiple currencies at once, saving you time and effort in the long run
- The amount loaded on the forex card is based on exact interbank rates. This literally means that you exchange currency for free
- Over 30 million stores globally accept forex cards, giving them an edge over other methods of carrying foreign exchange
- A solid chip and PIN protection along with robust security mechanisms make the Forex card safer to carry
- Top-notch security and safety of your Forex cards. Lock or unlock the card and track expenses without any hassle
- The foreign currency is loaded at a fixed rate, so you are protected from market risk
- By tracking your expenses in real time, you can also avoid spending money extravagantly
- Prepaid Forex cards function as debit cards, allowing cash withdrawals from almost 2 million ATMs worldwide
- Gree insurance coverage so, in case of an unfortunate mishap, you should not worry at all
- Reload the forex card balance online without leaving your home if you run out of funds
- As soon as you return, you can encash/unload the remaining balance online easily
Who Should Buy a Forex Card?
Everyone! Yes, you read that right. Getting a Forex Travel Card is highly recommended if you plan to travel abroad. They provide the best savings, especially to those who will be living abroad for an extended period of time since forex cards are not affected by fluctuations in exchange rates.
Final Verdict: Forex Card vs. International Credit/Debit Card
A Forex Card clearly outperforms an international debit/credit card in every aspect. Travelers who wish to enjoy a smooth trip overseas should use a Forex card, which has no issuance fee, zero reload/unload charges, & a better ATM withdrawal limit. If you want to save money and enjoy convenience, you can opt for the BookMyForex card, the best Forex card in India.
Why is Forex Card a better option for traveling in comparison to Cash?
The only advantage of currency notes is that they are accepted everywhere, but keep in mind that Cash is definitely the least safe option when traveling abroad. Instead, by opting for a Forex card, individuals can enjoy a hassle-free and secure travel experience, without worrying about carrying large amounts of cash or dealing with rate fluctuations. For a more detailed take on this, read further.
Comparison Between Cash and Forex Card
Cash is the default option for many as it is the simplest mode to make payments abroad. But cash comes with problems. Keep the below points in mind when carrying cash abroad:
Convenience:
If you are traveling to several countries, you will have to carry multiple currency notes. This is not convenient at all. Carrying a multi-currency forex card, which allows you to load several different currencies on one card, is a more practical and convenient approach.
Rate Volatility:
Unlike cash/currency notes that are prone to rate fluctuations, a Forex card has zero rate fluctuations and once it is loaded, the exchange rates on the card remain fixed. This means that you are protected against rate volatility if you use a Forex card instead of cash.
Cost-Effectiveness:
You will always find foreign currency notes to be more expensive than forex cards. This is because foreign currency note rates are static whereas forex card rates are determined by market dynamics. Moreover, demand-supply issues play an important role in determining currency note rates.
Safe to Carry:
It’s difficult and risky to carry lots of cash, and you will have to be extra careful with it. If lost or stolen, there’s no way to recover it. A Forex card comes with enhanced security features, including PIN protection, the ability to lock the card if lost or stolen, a backup/add-on card, free insurance coverage, etc.
Forex Card vs Cash – The Choice is Yours
| Parameters | Forex Card | Cash |
|---|---|---|
| Best For | •Buying anything under the sun •Accepted at millions of merchants worldwide, like restaurants, hotels, retail stores, and e-commerce websites | • Carry only for emergencies/smaller purchases |
| Advantages | •Support multiple foreign currencies •Zero markup live interbank rates •Ability to lock in exchange rates • Quick issuance process and free insurance cover • Remote and free reloading facility • Highly efficient expense management • Solid security features | • Wide Acceptance • Best for small merchants that may accept only cash. |
| Disadvantages | Nil | • Vulnerable to theft. • Difficult to carry multiple currency notes • Cash value could decline due to rate fluctuations • Hard to recover if lost or stolen |
Final Verdict: Forex Card vs. Cash
Forex Card is a better option for traveling in comparison to cash due to its convenience, security, better exchange rates, zero rate fluctuations, and additional benefits. A Forex card is accepted everywhere as in stores, ATMs, restaurants/hotels, and e-commerce websites worldwide, however, smaller establishments in remote areas might not accept card payments. Hence, carry a little cash only for emergencies, and the rest money in a forex card.
BookMyForex: A Leading Online Forex Platform in India
BookMyForex is the most trusted forex platform in India, providing customers with convenient and affordable services. You don’t have to spend time visiting various banks offering forex cards when you can get a forex card, as well as currency notes, online at the best rates with BookMyForex.
We offer you the ‘live’ market rates rather than the made-up ‘daily’ rates offered by banks and other currency exchangers. You can book your Forex card or currency notes order online in just 5 minutes and get them delivered on the same day to your doorstep. The best part is you won’t be charged any fees for the issuance, reloading/unloading, or maintenance of the card.
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