We have come a long way from the days of ‘Travelers cheques’ which were promoted a few years ago as the only substitute for foreign currency notes. From ATM, Debit, Credit and charge cards, we now live in a world of ‘Forex Cards’ which promise to make life in a foreign land easier. Whether it is travel related, shopping related or stay related, the ‘Forex Card’ has truly made an impact in the way we shop, travel or manage our expenses, when traveling abroad.
Let us find more about Forex cards, the features they come with and how to make the right choice among available options.
What is a Forex card
Forex Card is a prepaid card which can be loaded with foreign currency (or different currencies if traveling to multiple destinations) for making payments abroad.
It can be used –
- as a credit or debit card for all sorts of payments in foreign currency
- for POS as well as online shopping
- for withdrawing cash
Where can you get Forex card from
You can get a Forex card from :
- a Bank
- Registered / authorized Forex dealers, agents, agencies
What is needed to get a Forex card
A Forex card can be bought from any bank and not necessarily the one you bank with. For this, you need to submit :
- application form with all details
- passport copy
- PAN Card
- airline ticket/Visa copy (If specified)
Types of Forex cards
Forex cards primarily are of two types (there can be other variations for targeting particular client categories like students, business people etc) :
- Multi-currency Forex Card
This card can be used to load multiple currencies and can be used across the world. Although it depends upon the issuance company, some Forex cards allow 20+ currencies in one card.
- Single currency Forex Card
This can be preloaded with only one currency and will involve high cross currency charges if used in another country. Thus it comes with limited use. Though it is good for a single country trip.
Charges for Forex cards
Charges depend on features, card type and may vary from one issuer to another. Some of the charge categories you should know about, are:
- Card Issuance Fee
- Reload /renewal Fee
- Cancellation charges
- Cash Withdrawal charges
Features to look for in Forex cards
Here are the top features around forex cards:
- Exchange rate
As the rate gets locked-in when you preload the currency of your choice, look for the card which is offering the most competitive exchange rate.
- Reload facility
Your Forex card must have an online transfer or ‘reload’ feature in case you run out of funds while traveling. This is a key differentiator.
- Multi currency benefit
If you are visiting more than one country during the trip, this is the feature which will definitely make life easy.
- Safety enabled
A chip enabled Forex card for fraud prevention and safety from loss, theft or misuse should be the most preferred.
Many card issuers (specially banks) offer discounts, access to airport lounge and shopping offers. Checking and comparing for such features definitely makes sense.
Benefits of Forex Cards
Some of the important benefits of forex cards:
- As a Forex card is a specific product, its fee and charges are lower than other products like Credit Cards or Debit Cards.
- A Forex card can be purchased over the counter without having a previous relationship with the card issuing operator (Bank or authorized agency)
- Forex card is safe and easy to carry when compared with foreign currency notes
- In case of loss or theft, a Forex card can be blocked immediately
- A Forex card does not involve a charge every time it is used, unlike a Debit or Credit card
- A Forex card can be canceled and encashed at the prevailing rates once the cardholder is back
Difference between Forex Card and Credit Card
Let us check some differences between a Forex and Credit card :
|Category||Forex Card||Credit Card|
|Currency fluctuation impact||It is preloaded and hence the rate is locked in||The charge on card will vary as per the prevalent currency value|
|Mark up charges||No mark-up charge levied||Mark-up fee is levied per transaction|
|Acceptance||Somewhat limited||Very widely accepted|
|Cash Withdrawal||Lower charges||Higher charges|
|Limit||Reload option available, even online||Comes with a pre-set-limit. Payment is to be made for clearing past dues first|
|Transaction Fee||No transaction fee||Fee levied on every transaction|
|User charges||Economical||Expensive as charges levied at multiple levels|
|Safety||Value at risk is limited to the amount loaded, in case of theft, loss or mis-use||Entire Card limit is at risk|
Tips for using the Forex Card
Some of the important tips to note while using a forex card are:
- Keep a close watch on balance after every transaction
- Change the PIN immediately after card is issued by the bank / agent
- Carry a second card, credit or debit card as a backup
- Use the card for payment only in the preloaded currency(ies)
- Check the Forex card validity date
While planning a foreign trip, there are various options to choose from. It is a good idea to compare features, benefits, usability and charges before finalizing. Forex cards have emerged as convenient, safe and reliable companions during foreign trips. However, carrying some amount of cash is also advisable.
Yes, Forex cards can be used for cash withdrawal from the local ATM.
Most Forex cards come with insurance cover against loss, theft or misuse, accidental death etc. However you should ensure to go through the fine print for specifics.
Your Forex card can be canceled by submitting a cancellation request as soon as you are back from your trip. This can be done by visiting the card issuer or even online.
Forex cards when compared with Credit or Debit cards, have low ATM withdrawal charges, minimal currency mark-up fee and come with preloaded currency which prevents impact of currency fluctuations later.
As per the Liberalised Remittance Scheme (LRS) of RBI, in a financial year, an amount equivalent to $ 250,000 can be loaded. This limit includes all foreign currency transactions like remittances, purchases, transfers.
There is no charge for payments on POS or merchant terminals. This is one of the prominent benefits of a Forex Card over Credit or Debit Cards.