Credit cards can be a boon when you travel abroad, as it helps you travel with minimum cash and also comes to your rescue when you run out of it. But you must remember that the implications of using your credit card abroad is different from that while transacting in India. There are particular charges that are levied on all international transactions.
While most Indian credit cards are accepted across the world, there are currency and network-based charges associated with every foreign transaction, whether offline or online. When you use credit cards internationally, you must keep the following in mind:
Foreign Currency Transaction Fee
The credit card, if swiped within India, is free of charge. But if utilised abroad, you need to make the payment in the currency of the country for which a conversion charge is applied. For international transactions, network charges up to 3.5% of the transaction value.
Cash advance fees
In case you use your credit card to withdraw foreign currency, it can cost up to3 % of the transaction amount and additionally, foreign currency transaction markup fee is charged. Unless there is an emergency, avoid this by carrying sufficient cash or travel cards having muted charges.
If you have one credit card and want to apply for a new one to gain the benefits of traveling abroad, you must look for specific features according to international usage. Opt for the credit
card with minimal transaction fees, especially if you travel frequently.
Also, look for the credit card that will reward you highly on all your foreign transactions so as to bring down the transaction fees.
Online transactions have considerably eased travel-oriented bookings as you can book hotels, flights, tours, etc., with just a few clicks. However, at the time when you make a transaction though your credit card on a foreign website that charges in foreign currency, the online transaction is considered to be an international one. Hence, for this transaction, a markup fee of up to 3.5% is charged on the transaction value. You should ideally try and opt for global travel companies, hotel aggregators and airlines who are officially registered in India and enable you to make payment through Indian rupees as a means
of domestic transaction, thereby saving the additional fees.
Credit cards offer ease of use, and if utilised smartly during an international trip, can help you to manage your journey in a cost-effective way. However, do consider the above-mentioned aspects to avoid getting bogged down by high charges. It is recommended that you use prepaid forex cards for your foreign travel as it comes without any transaction fees. These cards are pre-loaded and allow you to access cash in required foreign currency. You are also free to top it up basis your requirement. Transaction through prepaid forex card also helps you save on the markup charge levied on credit cards.
The writer is head, Payment Products, Paisabazaar.com