I will be travelling abroad next month. What are the cheapest banking channels through which I can carry money. I plan to do a lot of purchasing and hence would require a lot of money. Which payment gateway would be cheapest for payment at retail stores?
As a traveller, the first thing you should know is the Reserve Bank of India’s (RBI) regulation about carrying the money abroad. According to RBI, an individual going abroad can carry up to $10,000 in one calendar year, irrespective of the number of visits in that particular year. Out of $10,000, you can carry a maximum of $2,000 in foreign currency notes and coins; the rest has to be carried in the form of travellers’ cheque or demand draft or prepaid travel cards. Another mode of payment could be credit cards.
Though one of the most convenient options, credit cards are the costliest among these modes of carrying money abroad. You may have to pay heavy transaction fee while using the card abroad. Credit cards give the advantage of withdrawing cash from an automated teller machine (ATM) in case of an emergency, but that too comes at a huge cost (money withdrawn charges + conversion fee + possibly higher exchange rates).
Another convenient option is travel prepaid cards. These are available with most banks and you can pre-load the card by up to $10,000 and use it conveniently at an ATM to withdraw cash or transact at retail outlets. This option has the benefit of a travellers’ cheque as well as credit cards and it is cheaper than a credit card. You will have to pay ATM withdrawal charges, but it is usually lower than what you are charged in credit card.
Travellers’ cheque is one of the cheapest options available. It comes in denominations of 20, 50, 100 of the currency required. It is simply a pre-printed cheque of a fixed amount that allows a person signing it to make payments. Travellers’ cheques are accepted by most merchandise establishments. You can encash them with banks and money-changers at prevailing inter-bank rates.
Though carrying cash appears to be the most convenient option, it has a major disadvantage. If lost or stolen, it is difficult to trace and replace.
It is wise not to put all the eggs in one basket and have a combination of the different modes of carrying cash abroad.
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