What are forex or prepaid cards?

Prepaid forex cards are the safest option over cash to meet the various foreign currency transaction requirements while traveling internationally. The card has a PIN code that offers protection and can be swiped for all transactions. If you are visiting only one foreign country, it is best to load the currency of the same country on the card. However, the card allows multiple currencies to be loaded onto a single card.

However, the maximum amount allowed to be transported or loaded under the RBI Liberalized Delivery System (LRS) is equivalent to 2.5 lakh per person per year.

How and where to get a prepaid forex card?

The forex card can be secured with the bank or bureau de change or licensed forex broker. All you need to do is complete the applicable form providing all the relevant details including personal information, amount of foreign currency, submit a certified copy of your passport, visa, etc. You should choose the card according to your needs.

How do forex cards compare to credit cards?

Forex cards offer a convenient way compared to credit cards when traveling overseas, as any foreign currency transaction executed overseas using an Indian credit card incurs a conversion fee. or high mark-ups that vary by currency, credit card issuer and merchant entity and typically vary between 3.5% and 5%. .

Here are a number of other factors that make the forex card a better choice over credit cards:

Mark-up or conversion costs:

Mark-up or conversion fees are levied in the event of transactions between currencies. So if your forex card is loaded with the same currency as the transaction currency, no currency markup fee is charged. However, in the event that the transaction currency is different from the currency loaded in your card, you must incur up to 3.5% of the transaction value as a cross currency markup fee.

To avoid these fees, you can also choose zero currency conversion forex cards that allow transactions in any currency with no fees or conversion costs.

However, if you swipe your plastic change or your credit card abroad, you cannot ignore the currency markup fees under any circumstances and it varies between 2 and 3.5% of the transaction value.

With Forex cards, the exchange rates are set for you as the card is loaded

Credit card transactions while traveling abroad may prove to be more costly if exchange rates rise on the transaction settlement date. This is because transactions in foreign currencies are billed in Indian rupees according to the exchange rates determined by the card issuers on the settlement date and not on the transaction date.

But with forex cards, the exchange rates are locked in for you as the currency is loaded onto the card. This protects the traveler against any sharp fluctuation in the exchange rate.

Cash withdrawal fees:

Each time you withdraw money by credit card at an ATM, you are charged a cash advance or cash withdrawal fee, as well as finance charges. Especially while the cash advance fee varies between 2 and 3.5% of the amount withdrawn or Rs. 250, whichever is greater, finance charges can reach 47.88% per year. And in the international country, when you use your ATM for foreign currency withdrawal, the issuer charges up to 3.5% of the transaction value as a markup fee. This further adds to the cost to you.

Forex cards, on the other hand, come with a lower cash withdrawal fee, but there is a pre-set cash withdrawal limit. The fees generally depend on the currency withdrawn.

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