Home / Money / Personal Finance /  Exchanging foreign currency: What are the cheaper options?

MUMBAI : The cost of the forex can very well be the point which will decide if your trip will turn out to be expensive or if you have cracked a good deal.

“Around 60% of Indian travellers visiting a foreign destination are first-time travellers. The parameters that people generally look at before purchasing foreign exchange are the exchange rate and the trust factor with the medium," said Sudarshan Motwani, founder, bookmyforex.com, an online platform for currency exchange services. A financially viable option is to ready your foreign currency before you embark upon your journey.


To exchange your foreign currency, you can approach public and private banks, money exchange centres, airports and online portals. However, currency exchange at airports can rip you off, as the charges range between 10% and 12% of the value of the amount. “Banks are one of the expensive options too and a lot of people do not realise that. Banks have tieups with local money exchanges and that’s how you get your forex," said Motwani.

Cost of your foreign exchange
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Cost of your foreign exchange

The currency changes multiple hands – from the exchanges to the bank and then to you. “At every step, the particular authority will take some margin for itself, ultimately increasing the cost for you when the currency finally comes to you. The ultimate charge you pay is in the range of 2-3%," he added.

Buying travel cards, apart from contacting the banks directly, are also an option. “They work like pre-filled debit cards and credit cards and the exchange rate offered on these cards are lesser," said Pawan Agrawal, founder, Investguru.in.

Such cards are generally available with the banks and currency exchange merchants, which have tie-ups with banks. “The overhead charges which the banks apply over and above the interbank rate are generally around 2.5-3.5%," added Motwani. These cards mostly have a currency withdraw charge depending on the bank.

Money exchange companies are also an option. However, the cost factor is a hurdle here too. “You may be able to get a cheaper deal, but it will all depend on how much you can bargain with them. They might quote anything around 5% and you may be able to bring it down to 2% involving a great deal of haggling from your end," said Motwani.

You can also buy forex online. “Not many have been able to find the confidence to handover currency worth lakhs to online platforms," said Motwani. For currency, online portals don’t take a margin but levy a delivery charge which will be in the range of 150 to 500, depending on your order. On each order goods and services tax (GST) is also applicable while buying and selling the currency.

“It is still a prudent decision to check the rates at all mediums available to you and then take a decision before flying abroad rather than choosing a medium without proper research," said Maneesh Ajmani, head preferred banking, wealth management and bancassurance, RBL Bank Ltd.


The basic precaution you can take is to do a careful assessment of your needs. Most countries will have a minimum forex requirement for the visa forms. For example, Thailand’s visa on arrival requires you to carry 10,000 Thailand baht for your visa. It is better if you carry some of your forex in cash and some in a travel card. “A good mix of 10-15% of your requirements in cash and the rest in a travel forex travel card. You can even withdraw cash using the travel card," said Ajmani.

You don’t want to be in a pickle of running out of the cash without any backup. In case of no back up, should you depend on money exchanges in another country? “The trick with money exchanges in a foreign country lies in knowing the place well. If you take examples of Indian cities itself: a money exchange in Churchgate might be offering higher rates than ones in King’s Circle, Matunga or Zaveri Bazaar. When it comes to a foreign country, only if you know the place really well can you rely on the exchanges," said Motwani.


Using your domestic credit or debit card might also not be the wisest option. “Indian debit or credit cards charge between 4% and 5% for withdrawing cash at an ATM and a little lesser when you are swiping the card in a store," said Agrawal. “It depends on the type of card, time of the year and a host of other factors so check with your bank before swiping your card abroad," said Ajmani. The exchange rate differs on a daily basis and you would not know the charges applied.

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