Home / Money / Calculators /  How to prepare for holiday spending abroad

It is time for summer holidays again, and many who are going on a foreign vacation would be done with the bookings. Bigger details such as visas, air tickets and hotel bookings would have all been taken care of. Now it’s time to look at some other details—how much currency to carry, in what proportion, and which SIM card to take.

Though these are smaller details, some planning in advance will help you avoid unnecessary trouble on what is supposed to be a relaxing time off from the daily humdrum.

The number one rule when going on a holiday is to sort out as much as you can before going. And here are a few ways to do just that.

Foreign currency

The Indian central bank allows a person going on a leisure trip abroad to carry a maximum of $250,000 or equivalent in one financial year.

Many travellers prefer to rely on cash, but there could be unforeseen circumstances in which more money may be needed. To limit dependency on any one form, it is better to use different payment products.

The amount of cash to be carried depends entirely on the destination one is going to, the duration of the travel and the intent, i.e., if the travel is planned with an aim of shopping, and so on, said a spokesperson of American travel website, TripAdvisor, in an emailed response. Cash comes in handy when you have to pay for smaller things, or even when travelling to smaller cities and towns.

Though there is no thumb rule on how much cash to carry, you can look at a mixed bag approach. “About 20% of your requirement could be in cash and the balance 80% by way of prepaid cards," said Karan Anand, head, relationships, Cox and Kings Ltd. “These cards can be used at point of sale (PoS) terminals where there are no charges, and in case any customer wants cash, she can use the card at an ATM for withdrawals. Using of prepaid card also eliminates the need to collect coins," he added.

Though prepaid cards do not charge for transactions at PoS terminals, withdrawing money using them will cost you. For instance, HDFC Bank Ltd’s ForexPlus Card, which can be used for various currencies, charges depending on the country in which you are using it. For ATM withdrawals, it will charge $2, €1.50, £1, 7 dirhams, and so on.

Using credit or debit cards to withdraw cash also comes at a high cost.

Frequent flier Angad Menon, 30, a marketing manager from Bengaluru, said he carries a mix of cash, credit and debit cards when he goes on holiday. “Depending on the country I am visiting, I change the mix of how I carry foreign currency," he said.

Hari Nair, founder and chief executive officer, Holiday IQ, said prepaid cards and travellers’ cheques are safer than cash, and therefore suitable for bigger amounts (for example, a family holiday).

If most of your expenses are paid for, since you are, say, going with a tour group, you may not need to carry a lot of cash. But if you are going to plan on the go and are not booking hotels, travel tickets in advance, more cash and cards will be needed.

Bengaluru-based frequent traveller Angad Menon usually carries a mix of cash, and credit and debit cards on holidays. Photo by Hemant Mishra/Mint
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Bengaluru-based frequent traveller Angad Menon usually carries a mix of cash, and credit and debit cards on holidays. Photo by Hemant Mishra/Mint

Easily accepted currency

Apart from the currency of the country you are going to, carrying some US dollars or euros can be helpful as these are widely accepted and can also be converted easily.

Sheetal Jhaveri, a Mumbai-based certified financial planner, and her family go on at least one foreign holiday a year. This year, the family of four is going to Malaysia for their summer break. “We usually carry only dollars. This is especially beneficial if there is money left over from the trip. You can come back to India and get it exchanged. For instance, for our Malaysia trip, we are only carrying US dollars and not Malaysian ringgit. But when we went to Europe last year, we carried euros and British pounds," she said.

How much of universal currency to carry again depends on the destination. “It is preferable to carry local currency to the destination for ease of transactions. However, at airports and other common areas, universal currencies such as US dollars or euros are accepted. So, travellers can carry 25% of their cash in such currencies, and the rest in the local currency," said Sharat Dhall, president,

Menon, too, says that the currency that he carries depends on the destination. For example, for his trip to Spain for honeymoon, he has carried just euros. But for his trip to Thailand in March, he had carried only Thai baht. Moreover, the exchange was lower than what he was getting on the dollar, he reasoned.

So, apart from carrying at least a small part of cash in a universally accepted currency, check the exchange rates for the local currency as well.

Credit card versus cash

Cash in the local currency can be used to pay for food, beverage, tips and taxis. Jhaveri said that on their holidays, they mostly carry cash. “We keep a budget for how we will be spending in a day and carry currency accordingly. We also use our credit cards, but this is only when we shop," said Jhaveri.

Many prefer cash as it is more acceptable and easier to use, but credit cards come in handy for making reservations, larger purchases and emergencies.

Be sure to know the charges before swiping your card. If you use a credit card to make a payment, the amount is converted based on the prevailing exchange rate. The conversion comes with a 2-3.5% mark-up, besides a service tax of 14.5% in India on the fee. Same holds true for debit cards as well. But don’t rely only on credit cards as some restaurants, stores and even hotels may not accept them.

Local SIM versus international travel plan

When in India, most of us don’t think twice before using our phone. While this may be much lesser on a holiday, easy communication is important. What if a connecting flight is missed and you have to change a series of bookings? Or, there is a show whose tickets have to be booked online?

You have three options. You can opt for international roaming service from your Indian mobile service provider, take an international SIM card, or buy a local SIM. International SIM cards are country-specific cards. Companies such as Matrix Cellular (International) Services Ltd provide these. Though these have to be bought in India, they are ready to use as soon as you arrive at the destination. You have both prepaid and post-paid options.

If you choose to buy local SIMs, you can buy prepaid plans.

Let us say you are going to the UK for a month. Here is a comparison of the three options. For instance, Vodafone India, for a 30-day international roaming plan, charges 1,499, plus 15 per minute for outgoing calls, 30 per minute for international calls, 30 a minute for incoming calls, and Internet at 30 per MB, according to the information available on the service provider’s website. Some packages also offer free Internet. A 30-day SIM from Matrix comes at 3,099, with free incoming calls, unlimited outgoing calls, and 1 GB data, according to the company’s website. As per UK-based Lycamobile’s website, a local SIM will cost you £7.50 (about 720) for a period of 30 days, which will get you 150 national minutes and 150 national SMSs free, and 500 MB of data.

“I prefer buying an international SIM card as it is economical. All I have to do is activate the card when I land. Taking an international roaming pack (from an Indian service provider) is too expensive," said Menon.

Of course, there is always the option to use free Wifi. “With Wifi freely accessible, it has turned into the least expensive option. To access calls, using a local SIM card in an unlocked device can save you significant amounts of money. The only drawback is that you wouldn’t be able to access your Indian number," said Daniel D’souza, head-sales, India and non-residential Indian markets, SOTC Travel.

With even these decisions taken care of, all you now need to decide is when to wake up, what to eat, and where to go (or not). Plan in advance and have a worry-free holiday.

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