TOP 10 PROVEN TIPS TO REDUCE YOUR FOREX CARD CHARGES

Who doesn’t want to travel to foreign countries, be it for leisure, for studying abroad, for business, or bleisure? The excitement of exploring new places, different cultures and venturing into new adventures can brighten even the dullest souls. All thanks to digital evolution, economic growth, and socio-cultural interconnectivity, the world has now come closer. Everyone gets a fair chance to travel across the globe and wander into the beautiful corners of the world, as per our whims and fancies.

Many historical factors and contemporary trends have grown the fondness for international tourism. For example, in 2019, the number of international travelers reached 1.2 billion, a 56-fold jump since 1950, when the proportion of transnational tourists stood at a meager 25 million. However, despite such praiseworthy numbers, international travel still gets difficult sometimes because of the Forex card charges, international ATM withdrawal fees, and more. Such charges make transacting on international lands challenging and add a considerable burden to our credit card bill.

However, not all hope is lost, as there are ways to avoid foreign transaction fees. But before getting into the top ten ways to avoid such overhead expenses, let us first understand what FX fees are all about!

WHAT ARE FOREIGN TRANSACTION FEES?

A foreign transaction fee can be defined as a charge levied by a financial institution, such as a Credit card issuing company, upon their customer for an electronic card transaction abroad. In other words, the surcharge that appears on your Credit or Debit card bill after you make a purchase that passes through a foreign bank or happens in a currency other than INR is known as a foreign transaction fee or Forex card charge. Usually, foreign transaction fees are applicable on card purchases made in foreign locations during international travels, but, at times, they may apply when you purchase something online in your home country from a foreign vendor who processes transactions in their local currency.

A Forex card charge has two distinct parts – 

• Network Fee – It is that part of the FX charge exacted by your Credit Card network (VISA, RuPay, Mastercard, for example). Both Visa and Mastercard levy a 1 percent Network fee.

• Forex Markup Fee – It is that part of the FX fee, which your Credit Card Company charges on top of the network fee. For example, when you transact purchases using your domestic Credit or Debit card abroad, the card issuer automatically does the currency exchange based on the spot exchange rate. However, in return for convenience, your credit company charges an overhead fee of anywhere from 3 percent to 5.95 percent, which is reflected in your total withdrawal costs. The fee is known as an Issuing bank charge. The issuing fee ranges from 2 percent to 5 percent. However, some international cards do not levy the Forex markup fee, so you do not have to pay for anything atop the Network fee.

Apart from the fees mentioned above exacted on transactions made through swiping on a PoS counter abroad, we have other Forex Card charges that everyone should be aware of!

SOME IMPORTANT CHARGES TO CONSIDER ON YOUR NEXT INTERNATIONAL TRIP

• International ATM Withdrawal Fee – It is the fee your bank or Credit Card Company charges when you use an India-based electronic card to withdraw money abroad. Usually, the ATM withdrawal fee is standardized between USD 3 to USD 5 per usage. Although more and more financial institutions are waiving off international cash withdrawal charges, you still have to pay an overhead fee to the owner of the foreign ATM.

• Balance Enquiry Fee – As the name suggests, it is the fee exacted when you check your account balance at an international financial institution.

• Transaction Slip Retrieval Fee – An electronic card company may also levy a fee when you retrieve a transaction slip from an ATM abroad.

• Inactivity Fee – An idle period on your credit or debit without any transaction for six months or more may fetch fines. 

Now that we have a fundamental idea of the different types of Forex Card charges let us look at the ten best ways to escape them.

TOP TEN TRICKS TO SAVE FOREX CARD CHARGES ON YOUR UPCOMING INTERNATIONAL TRIP 

• Tip 1 – Research about the Forex Card Charges Before You Pack Your Bags 

The first and inevitable step to avoid foreign transaction fees on your next international trip is to discuss things with your bank. Find out what fees are associated with your Credit or Debit card when traveling abroad. By enquiring about the different FX fees, you might also learn about your bank’s various travel benefits. Likewise, your Credit or Debit Card issuing company might minimize the international ATM withdrawal charges or the various foreign transaction fees in exchange for upgrading to a premium account when they know about your travel plans. 

• Tip 2 – Do Not Skip on Cash 

It is always a good idea to buy foreign currency from your local bank before you hop onto a plane for an international adventure. The amount of physical money you carry overseas depends on your destination and your requirements. Experts say that the ideal ratio of physical cash and electronic money should be 20:80 respectively. However, if you are visiting more intrepid places, possessing more cash will help prevent irksome situations and unexpected Forex Card charges. Remember to keep an eye on the exchange rates over the month prior to your trip, and try to buy foreign currency on a date when you feel you get the most out of your investment.

• Tip 3 – Check If Your Bank Has International Partnerships

Some banks partner with overseas institutions to offer their customers fee-free access overseas. For instance, Bank of America customers can withdraw money for free at Scotiabank ATMs in Canada, Chile, Peru, and Mexico. Check if your financial institutions also have such collaborations.

• Tip 4 – Avoid a Foreign Currency Exchange Kiosk At All Costs – 

Currency exchange kiosks in every airport are dispersed at arm’s length in tourist hotspots. However, they are an absolutely horrendous deal as the exchange rates you get at these places do not compare to what you get from your travel credit card. Therefore, if you do not need cash for a transaction, simply use your Credit card, as it is much cheaper than exchanging currency at a Kiosk. 

• Tip 5 – Avoid Hotel ATMs 

Cash withdrawal fees at a hotel or store can range from USD 1 to USD 10 per transaction. Thus, it is best to avoid taking out money from a random ATM you see inside your hotel or at a restaurant. However, if you need more cash for an emergency, look for a bank ATM with a plus sign. They also have the usual one-off charge for the transaction but are cheaper than hotels or store ATMs overseas.

• Tip 6 – Opt for a Travel Credit Card

Another great way to dodge Forex Card charges is to ditch your Credit card altogether for your international trip and opt for a card that offers excellent travel benefits. Several Credit card companies do not levy FX fees and primarily cater to the needs of travelers.

• Tip 7 – Dodge ATM Withdrawal Charges Strategically

Some of the ways to avoid ATM withdrawal charges on your next international trip are –

1. Switch to a Fee-free Bank – There are certain banks, such as Discover, which do not levy overseas ATM withdrawal fees. You can avoid the overhead withdrawal charges by doing your homework and finding such an institution.

2. Check for Reimbursements – Some banks, albeit very few, cover the cost of ATM fees on overseas money withdrawals.

• Tip 8 – Use Traveler’s Cheques At Times

Traveler’s cheques should not be your go-to solution for transacting purchases overseas, as they have a lot of demerits, such as being outdated in many places or getting stolen easily. However, they save you on foreign transaction fees and ATM withdrawal fees; thereby, you can cut down on a lot of expenses. But, make sure that you depend on traveler’s cheques a little less, as they are not acceptable at all spots, even in the most populous tourist destinations.

• Tip 9 – Opt for an International Debit Card 

The penultimate tip to avoid Forex Card charges is to opt for an international prepaid card that allows you to load money in multiple currencies and make transactions overseas without any markup charges. Such electronic cards also come with rewards, like points, travel security, and more, to offer premium services and satisfaction to their customers, mainly globetrotters or study-abroad students.

• Tip 10 – Exchange Currency in Bigger Cities

If you are bound to exchange currency overseas due to some emergency, it is best to do so in larger cities, as smaller areas do not offer the most favorable exchange rates.

So, there we have it, the top ten trips to dodge Forex Card charges on your upcoming international trip.