There is no denying that embarking on a trip to popular foreign destinations can pave the way for a fun-filled experience. Be it a business trip or a family holiday, you must plan in advance how you are going to pay for your expenses abroad. A majority of people are of the opinion that using an Indian debit card abroad is the best way to make international payments.
Such notions stem from a lack of awareness about the hefty service charges that are associated with debit/credit cards. Debit cards can come in handy for paying at shops, hotels, restaurants and merchant outlets across the globe. Above all, they can be used for withdrawing money when the need for hard cash arises. But little do people realize that frequent use of debit cards in international cities can take a heavy toll on their pockets in the long run.
Common Charges Associated With International Debit/Credit Card Usage
Here are some charges you need to be aware of before using your credit/debit card for making payments overseas.
1. Currency conversion charges: When you swipe your debit card overseas, the process of currency conversion takes place as the balance in your card is reflected in INR. The Indian Rupee is converted to the currency of the foreign country and conversion charges are levied for the same. Currently, the currency conversion charges range between 1-3% of the total transaction amount.
2. ATM withdrawal fees: Most ATMs abroad charge a flat withdrawal fee every time you use your debit or credit card to withdraw money. The fees may go up to 4% of the transaction’s value. The ATM withdrawal charges aren’t GST-inclusive, so you’ll also have to shell out extra bucks.
3. Foreign transaction charges: The foreign transaction charges are levied every time you use your debit or credit card abroad, be it at a POS terminal or an ATM. The overseas transaction charges may fall anywhere between 2.5-3.5%. In addition to these transaction charges, debit card usage may also be subject to a foreign currency markup fee of 3.5% which is again charged by the debit/credit card issuer.
4. Balance inquiry fees: If you check your account balance at an ATM in a foreign country, some banks charge you a fee. Depending on the bank, this fee may differ and is often in addition to the withdrawal fees.
5. Inactivity/Annual Fees: It’s critical to be aware of any potential inactivity costs if you occasionally use an international debit or credit card. Additionally, some banks impose an annual fee on credit and debit cards. Consider contacting your bank to learn more about their inactivity/annual fee schedule.
6. Card Replacement Fees: In the unfortunate event that your debit or credit card is lost or stolen while traveling internationally, you may need to get a replacement card. Most banks charge a replacement fee for issuing a new card, especially if it needs to be expedited to your location.
Things to Keep in Mind When Carrying Your Credit/Debit Card Abroad
Given below are the 7 most important things you should keep in mind before carrying your debit or credit card overseas.
1. Choice of card: It’s possible that not all credit/debit cards are accepted abroad. Check the countries where your card can be used, even if it is an international card. Additionally, the card should give you some benefits for the trip abroad, so you can save a little money.
2. Research the networks supported by your card: The easiest way to ward off international ATM access fees is to opt for a debit/credit card that supports a large array of networks. If your card provider is a participant in an international banking network like Global ATM Alliance, it would waive the foreign ATM fees it normally charges.
3. Inform your bank of your international trip beforehand: It has been seen that people who do not share their travel plans with their banks end up bearing the embarrassment of declined transactions abroad. You must get in touch with your bank representatives and inform them of your international trip a few weeks prior to your departure.
4. Beware of the DCC scam: With the use of Dynamic Currency Conversion (DCC, you can convert the amount of your transactions into Indian Rupees (INR). DCC is available at a number of merchants and ATMs abroad. However, it would be ideal if you avoided it since there is a fee for the currency conversion involved in it. Your credit card bill will reflect this.
5. See if your bank offers reimbursement for ATM fees: It goes without saying that hefty ATM fees can add to your travel expenses significantly. However, there is a good chance that your bank offers accounts that provide reimbursements for international ATM withdrawal charges. So, try to approach your bank and ask if it can reimburse some percentage of ATM fees to further increase your savings.
6. Spending limit: There is a maximum credit limit on each credit card; the lower the limit, the more restricted the card will be. If you want to use your credit card abroad, pick one with a greater spending limit due to the high cost associated with overseas travel.
7. Keep your card safe and secure:- When you are traveling, it is important to take steps to keep your credit and debit cards safe and secure. This includes keeping them in a safe place, such as a money belt or wallet, and being aware of your surroundings when you are using them.
What is the Best Substitute for a Debit/Credit Card?
When it comes to visiting international destinations, there is a wide range of expenses you need to take care of. A prepaid Forex card is the best instrument to make payments abroad. Forex cards are accepted across 30 million stores globally and they are a perfect substitute for your debit/credit card, here’s how:
|Features||Forex Card||Debit/Credit Card|
|Card Issuance & Delivery||Easy online order with same-day delivery, No account opening required||Delivery within 7-10 days and requires credit assessment|
|Mark-up fee||Zero markup rates, Rates linked to Interbank rate i.e., rates that you see on search engines||A high mark-up of 2-5%. Even zero mark-up credit/debit cards are marked by 1% as static rates are offered by networks|
|Forex Rate Stability||Lock-in exchange rate; protection from rate fluctuations||Exchange rate varies for each transaction. Banks may debit money separately for forex margins|
|Charges||Zero issuance, Zero reload, No annual or inactivity fees||Have issuance, annual, and all additional charges|
|Reloadability||Instant and free reloads via App||Requires timely bill payments/amount top ups|
|Cash Withdrawal Fees||ATM withdrawal fee of Approx $2 USD||Bank dependent, can go as high as 3.5% of the withdrawn amount|
|Replacement in case the card is lost/stolen||Add on card/backup forex card available. Replacement abroad is possible within 3 days||Lack of an easy replacement facility|
|Interest Rates||No interest as it's a prepaid card||24-36% Interest charged on unpaid balances|
|Offers and Rewards||Free International SIM and offers on dining, travel, accommodation, etc||The card offers loyalty points and cashback|
|Insurance Cover||Free Insurance available||Insurance coverage available|
|TCS Obligations||Zero TCS for transactions below Rs 7 lakhs per individual per financial year. Up to 20% TCS for orders above Rs. 7 lacs in a financial year||Credit card transactions for international payments do not come under the purview of LRS & are not subject to TCS as of now|
Traveling to international destinations is a sure shot way to break away from the ordinary and broaden your horizons. Since overseas travel involves various costs, choosing the right mode of payment becomes a matter of high importance. While the lure of earning reward points and zero TCS applicability might make credit cards seem appealing, the hidden transactional charges that follow their usage can prove quite costly.
So, should you use an Indian debit card abroad instead of a credit card to boost savings? No matter which credit/debit card you choose, you will be subject to hefty fees that will negatively impact your budget. If you do not want to get slammed with exorbitant charges abroad, we recommend you get a prepaid forex card from Bookmyforex for your upcoming trip.
1. Do international credit/debit cards have a daily spending and withdrawal limit?
Yes, all debit cards come with a daily spending and withdrawal limit. If you exceed the daily limit, your debit card will be rendered nonfunctional for further transactions on that given day.
2. Will I have to pay extra from my pocket in case my credit/debit card gets lost?
Yes, in many cases, you may have to pay an extra fee for the replacement of a lost or stolen debit card. Banks often charge this fee to issue a replacement card. The specific replacement fee can vary from one bank to another, and it may also depend on the type of account or card you have.
3. How do I determine the exchange rate for every debit card transaction?
It must be taken into consideration that exchange rates fluctuate on a real-time basis based on the market performance. This simply means that you will have to check the exchange rate every time you make a debit card transaction abroad.
4. Will my international credit/debit card support all foreign currencies?
Most international credit/debit cards offer support for only a limited number of foreign currencies. You should confirm with your bank beforehand whether your debit card can be used for international transactions and withdrawals in the country you are visiting.