Prepaid forex cards can make life easier for overseas travellers

If you’re travelling abroad this summer, you might want to consider the various options for carrying foreign exchange (forex). You can use good old travellers’ cheques, which frequent traveller Supriya P calls “old economy”. Or you can use pre-loaded forex cards. Then, there’s your international credit and debit card too.

Travellers’ cheques (TC) are the age-old way of carrying forex securely. But remember, not every merchant outlet will accept TCs. Also, you’ll have to pay a commission fee to encash TCs at a moneychanger.

The other alternative is prepaid forex cards, which has become popular. You can choose from HDFC Bank’s ForexPlus Travel Card, ICICI Bank Travel Card and State Bank of India’s SBI Vishwa Yatra Foreign Travel Card, for instance. Thomas Cook India too has a GlobalMoney Card. “The biggest advantage of the pre-loaded card is that it can be used 24 hours unlike the TC,” says Parag Mehta, president and head, foreign exchange, Thomas Cook India.

All you need to do is fill up the required application forms, submit a photocopy of your passport and PAN card and the required funds. Once the funds are cleared, the bank will issue your card with a personal identification number (PIN).

How does this work? You use it like a regular debit card. You can also use it to withdraw cash at an ATM.

You can load the card in currencies like the US, Australian or Canadian dollar, pound, Euro, Japanese yen and Swiss franc. But you can also use it — or withdraw cash — in the currency of any country though at the currency conversion rate applicable at the time. The forex card can be reloaded anytime though it has to be done in India and the procedure is cumbersome.

There are issuance, card reload, balance enquiry and ATM cash withdrawal charges, among others, of course. For instance, HDFC Bank and ICICI Bank have issuance fees of Rs 150. HDFC Bank’s ATM cash withdrawal charges are $2 per transaction if you have a dollar denominated card (and Euro 1.50 and Pound 1 for the respective currency cards). For ICICI Bank, the charges are 1.50 in the issued currency per withdrawal. SBI has an issuance charge of Rs 110 plus service tax and ATM withdrawal charges of $1.75, Euro 1.50 and Pound 1.25.

Remember, even if you use your international credit or debit cards to withdraw cash from an ATM, you will have to pay a charge. For instance, for HDFC Bank’s debit card, this is Rs 110 plus taxes.

One advantage of the forex card over credit and debit cards is that the exchange rate is fixed on the date you load it, and does not fluctuate. Of course, this can work against you if the rupee appreciates. “A forex card is safe and very convenient. You also don’t lose on charges unlike a credit card,” says Sucheta Shah, a finance professional, who used the card on a recent trip to the US.

Don’t use the forex card for temporary charges like hotel and rental car deposits though, because if your final bill is lower than the deposit, the difference will only get credited 20-35 days after the transaction date.