Spend ₹50,000 abroad on a traditional credit card and the forex mark-up plus GST can add ₹1,000 to ₹2,000 to the bill. Stretch that to a ₹2 lakh family holiday and the extra cost reaches ₹4,000 to ₹8,000. Vivek Bagree, Chief Business Officer for Cards at Niyo, says travellers rarely see those sums itemised when they pay.
Bagree’s calculations suggest the right choice of card can cut as much as 12% in fees and charges on international purchases and ATM cash advances. For frequent travellers, he said, the savings can add up to a free trip every few years. The gap between options is often wider than people expect, he noted, especially on expensive trips or for those who fly abroad two or three times a year.
The mark-up
He called the forex mark-up the single biggest difference between cards. Most traditional credit cards levy 2% to 4% on each foreign transaction, and GST is charged on top of the mark-up. On one coffee the amount looks trivial. Across a whole trip it builds quickly.
Forex cards sidestep the mark-up. Travellers load foreign currency ahead of time and lock in the rate. Bagree advised factoring in issuance fees, reload charges, encashment costs and cross-currency conversion fees, which differ widely between providers. Zero-forex-markup cards remove the charge entirely and let people pay in local currencies without pre-loading.
Cash machines
ATM withdrawals are the second cost he says people overlook. A regular credit card typically charges a 2.5% to 3.5% cash advance fee, subject to a minimum. Interest runs from day one until the balance is cleared, and the forex mark-up applies to the rupee equivalent as well.
Bagree put a number on it: taking out the equivalent of ₹20,000 can cost ₹1,200 to ₹1,600 in fees and finance charges alone. Forex cards and secured credit cards, by contrast, offer free international ATM withdrawals up to monthly limits.
“A single ATM withdrawal on a regular credit card can therefore cost the traveller 6-8% before they have even spent the cash,” he said. His summary: the right card saves 2% to 4% on every international transaction and avoids 6% to 8% in cash advance costs, which together make up the 12% ceiling.
No single winner
“There is no single ‘best’ option,” Bagree said. “The right choice depends on how a traveller spends, how long they are travelling, and how much certainty they want on exchange rates.”
He rated forex and prepaid travel cards a stronger fit for people on tight budgets who want a locked rate. Credit cards bring flexibility, rewards, wide acceptance and a cushion in emergencies, but carry the mark-up.
Bagree also told travellers to weigh the full tab, not one line of it: mark-up, GST, exchange rate spread, ATM fees, reload or encashment fees and taxes. Liberalised Remittance Scheme limits and Tax Collected at Source rules can also apply, depending on the type and size of the transaction.
