Indian travellers choosing a foreign destination have multiple options to choose from when it comes to facilitating payments. Popular among these are , forex cards and pre-paid travel cards. But is any one option better for travellers compared to the other?
“There is no single ‘best’ option,” believes Vivek Bagree, Chief Business Officer, Cards at Niyo, he added, “the right choice depends on how a traveller spends, how long they are travelling, and how much certainty they want on exchange rates.”
Do forex and prepaid travel cards have an edge?
Forex and prepaid travel cards are a strong fit for travellers who want budgeting discipline and exchange-rate certainty. Here funds are loaded in advance, which locks in the rate and shields the traveller from currency fluctuations during the trip, Bagree noted. “Compared to a traditional credit card carrying a 2–4% forex mark-up, this alone can save ₹4,000– ₹8,000 on a ₹2 lakh trip,” he added.
Bagree that while credit cards offer flexibility, rewards and universal acceptance, which makes them useful for large purchases, hotel pre-authorisations and emergencies. But the two key costs can add up quickly when it comes to foreign travel.
“The 2–4% (plus GST), and steep ATM cash withdrawal charges — typically 2.5–3.5% of the amount withdrawn (subject to a minimum fee), plus interest from day one and the forex mark-up on top. A single ATM withdrawal on a regular credit card can therefore cost the traveller 6–8% before they have even spent the cash. Raising the credit limit, too, is rarely instant — it usually involves an application, a fresh bureau check, and a wait of several days,” he explained.
Zero-forex-markup cards a growing option?
Bagree noted that this is the fastest-growing category as it combines the “convenience of a regular debit or credit card with transparent pricing and no mark-up on international spends”. It can be a smart alternative for “students heading abroad, young professionals on their first overseas trip, or anyone still building a credit history”, he added.
For most travellers, the most practical setup is a combination: a zero-forex-markup debit card for day-to-day spends and ATM withdrawals, a credit card (ideally a zero-forex or secured zero-forex variant for first-timers) for hotel bookings and large transactions, and a small float of local cash for places where digital acceptance is still patchy, feels Bagree.
Quick comparison of pros and cons
Credit cards vs forex / pre-paid travel cards vs zero-forex mark-up cards: A quick comparison across the four options travellers consider today:
| Card Type | Pros | Cons |
|---|---|---|
| Traditional Credit Card |
|
|
| Forex Card / Pre-paid Travel Card |
|
|
| Zero-Forex-Markup Debit Card |
|
|
| Secured Credit Card with Zero Forex |
|
|
What are the key things to keep in mind?
The biggest cost differentiator is the — Most traditional credit cards charge 2–4% on every international transaction, with GST applied on top of the mark-up.
Further, ATM cash withdrawals on a regular credit card overseas attracts a 2.5–3.5% cash advance fee (subject to a minimum), interest from day one until the dues are paid, plus the forex mark-up on the rupee equivalent. Withdrawing the equivalent of ₹20,000 in cash can therefore cost upwards of ₹1,200– ₹1,600 in fees and finance charges alone.
According to Bagree, beyond fees, travellers should also be mindful of Liberalised Remittance Scheme (LRS) limits and TCS, which can apply depending on the nature and value of the transaction.
“Ultimately, travellers should evaluate the total cost — forex mark-up, GST, exchange rate spread, ATM cash withdrawal fees, reload or encashment fees, and applicable taxes — rather than focus on a single line item. Even a 2–4% difference compounds into meaningful savings over the course of an international trip,” according to Bagree.
The bottom line? Choosing the right card means significant savings (2–4% on every international transaction or 6–8% in ATM cash advance fees). “For the frequent travellers, this could add up to a free trip every few years,” he noted.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.