Whether you are a travel junkie, an intermittent traveler, a first-time explorer, traveling on business or leisure, the first thing you need to take care of is your money when traveling. How do you intend to carry your cash in a way that is most safe, secure, and convenient? You have the option of carrying cash as hard currency, debit or credit cards, traveler’s cheques, or prepaid travel cards, also called forex cards.
Seasoned travelers will vouch for the ease and simplicity of prepaid travel cards and for good reason. Let’s take a look at what they are so you can take an informed decision about using them before your next trip.
What are prepaid travel cards?
Prepaid travel cards are cards that can be loaded with multiple currencies on a single card, but up to a certain limit. You can get them from an authorised forex dealer or from a bank. The process to get a card is simple and hassle free. All you have to do is fill out the application form and submit it along with a self-attested copy of your passport (with some bankers or lenders requiring a copy of your visa as well).
Some cards allow you to load up to 15 different currencies. This can save you a lot of time and save you from the hassle of stocking up on different currencies if you are traveling to more than one country. The card can be topped up and can be used not just for shopping but to withdraw cash as well.
Benefits of a forex card
Forex cards have several advantages over other forms of carrying foreign currency. These benefits are:
- Lower rates for ATM withdrawal: When you withdraw money from an ATM abroad using your credit or debit card, you will be charged cash advance fee, foreign currency transaction fee, as well as interest on the money withdrawn. However, with a forex card the cash withdrawal fee is much lower than that of a credit card and is a fixed amount for every transaction.
- Lower foreign currency markup fee: The markup fee is what is paid over and above the value of transaction when you spend money abroad using a credit card or prepaid travel card. However, this is much lower with the latter. There is no markup fee if you use a forex card to withdraw money from within the currency jurisdiction that it was loaded with. You can also avoid markup fees by using a multi-currency forex card when you are traveling to multiple countries.
- Conversion rate is locked: The conversion rate of the foreign currency is locked as soon as your forex card is loaded. This can protect you from fluctuations in the foreign exchange rates, which you are not going to get protection from if you use a credit card. With the state of the global economy today, and fluctuations happening ever so often in the forex rates, having your currency exchange rate locked can be a blessing as you don’t end up overshooting your budget. It also makes it easier to remember what the exchange rate is when you are about to spend money as it is already fixed, so there is no need to look it up every day, calculate, and convert before each transaction. You can use that time instead to enjoy your holiday without any stress or hassle.
- No forex conversion fee: A forex conversion fee is what you are charged when your Indian currency is converted to foreign currency when you spend abroad. This is applicable to credit cards but not forex cards. This is because at the time that the card was loaded with currency, it gets converted so a future conversion is unnecessary (and moreover, it is locked on a forex card, as mentioned in point #4). There will be a fee if you wish to reload foreign currency on your card, however.
- Minimal fee: The only money you pay for a forex card is its price at the of purchase which is called the issuance fee. This is unlike a credit card which has annual fee, processing fee, renewal fee etc.
What happens if you have some balance on your forex card when you return to India?
In such a scenario, you can easily unload your card (with a nominal unloading fee to be paid) at the prevailing conversion rates. While expiry dates vary from issuer to issuer, most forex cards are valid for 3 to 5 years. This means that you are good to go for a couple more trips before your card expires.
Prepaid travel cards make your vacation or business trip even more pleasurable as you don’t have to worry about having sufficient money on you or the conversion rates on a daily basis, thus making it a great way to carry your money