While most credit cards issued in India are accepted across the globe, there are network and currency-based fees associated with each foreign transaction, whether online or offline. Here are a few things to keep in mind while using credit cards internationally.
Foreign Currency Mark-up Fee
Your credit card is free of charge when you use it on a network within the country issuing it, but if used abroad, you pay in the currency of that country for which a conversion fee is applied. During an international transaction, the concerned network charges anywhere between 1-2 per cent fee on the foreign currency exchange. Anything in excess will be a small margin for the select bank, if any.
Foreign Transaction Fee
Irrespective of the currency type, transaction amount, and cash withdrawal, lenders charge a foreign transaction charge, which ranges anywhere between 1.5 per cent and 3.5 per cent of the total transaction. While it may not seem a lot for smaller transactions, for big ones the fee can run into thousands of rupees.
If you are using your credit card overseas, withdrawing cash will definitely increase your burden. It can cost anything between 1 per cent and 4 per cent fee in addition to the standard cash withdrawal rate on your credit card. If you need to withdraw cash at all, check different bank rates prevalent in the country you are in to look for the least withdrawal fee. It is, however, recommended that you carry cash or a travel card whose charges are muted compared to your card.
Choice of Card
If you hold more than one credit card or are thinking of applying for a new one that benefits you while traveling abroad, look for specific features to international usage. Opt for a card that has minimal transaction fee, especially if you are a frequent traveller. Also look for a card that rewards you heavily on foreign transactions so that the transaction fee can be nullified when redeeming those rewards.
Online transactions have eased travel related bookings as one can book flights, hotels, cars, movie and plays, tours, cruises etc. with just a click of a button from desktop or mobile. However, when transacting on a foreign website, the transaction will be considered an international one even if you do it while in India.
Try opting for global travel companies of airlines and hotel aggregators who are registered in India for such businesses and allow you to pay in rupees as a domestic transaction, thus saving you the additional fees.
(Adhil Shetty is CEO of Bankbazaar.com)
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