International travellers: Compare options before your next foreign trip to save up to 12% on card charges and fees

Planning an international trip? Calculations show that choosing the right card can save you up to 12% in associated fees and charges on every international transaction and ATM cash advance cost when travelling abroad, according to by Vivek Bagree, Chief Business Officer, Cards at Niyo. The savings can add up to a free trip every few years for frequent travellers, he added.

We breakdown the costs associated with the various spending options — credit cards, forex cards and pre-paid travel cards — available to travellers. According to Bagree, “There is no single ‘best’ option. The right choice depends on how a traveller spends, how long they are travelling, and how much certainty they want on exchange rates.”

Forex mark-up, charges, fees, tax: Compare card costs

Bagree noted that the difference in cumulative costs is often larger than travellers realise, especially on high-value trips or for those who travel two or three times a year.

Forex mark-up is the biggest cost differentiator. Most traditional credit cards charge 2–4% on every international transaction, with GST applied on top of the mark-up. On a single coffee purchase, it looks trivial; over a trip it compounds quickly.

• On a ₹50,000 overseas spend, a traditional credit card can add ₹1,000– ₹2,000 in forex mark-up plus GST. On a ₹2 lakh family vacation, that becomes ₹4,000– ₹8,000 in additional costs — money that the traveller rarely sees itemised at the point of sale.
• Forex cards avoid the mark-up by letting travellers load foreign currency in advance and lock the rate, but travellers should factor in issuance fees, reload charges, encashment costs and cross-currency conversion fees, which vary considerably across providers.
• Further, a zero-forex-markup cards remove the cost altogether while letting travellers spend in local currencies without pre-loading.

ATM cash withdrawals are the other major cost most travellers overlook. On a regular credit card, an overseas ATM withdrawal typically attracts a 2.5–3.5% cash advance fee (subject to a minimum), interest from day one until the dues are paid, plus the forex mark-up on the rupee equivalent.

• Withdrawing the equivalent of ₹20,000 in cash can therefore cost upwards of ₹1,200– ₹1,600 in fees and finance charges alone.
• Forex cards and secured credit cards, by contrast, offer free international ATM withdrawals up to monthly limits.

Liberalised Remittance Scheme (LRS) limits and Tax Collected at Source (TCS) are another thing that travellers should also be mindful of beyond fees. These can apply depending on the nature and value of the transaction.

“Ultimately, travellers should evaluate the total cost — forex mark-up, GST, exchange rate spread, ATM cash withdrawal fees, reload or encashment fees, and applicable taxes — rather than focus on a single line item. Even a 2–4% difference compounds into meaningful savings over the course of an international trip,” feels Bagree.

He added, “Bottom line: Choosing the right card can save 2–4% on every international transaction — and avoid 6–8% in ATM cash advance costs — adding up to a free trip every few years for frequent travellers.” This is a cumulative of up to 12% saved in associated fees and charges when travelling abroad.

Quick overall comparison between card options

Bagree feels that forex and prepaid travel cards are a stronger fit for travellers on a tight budget and who want exchange-rate certainty as these are pre-loaded and have rate locks that shields the traveller from currency fluctuations during the trip. In comparison, while credit cards offer flexibility, rewards and universal acceptance, and are useful in emergencies, they are also subject to between 2–4% forex mark-up charge which can inflate the bill by ₹4,000- ₹8,000 on a ₹2 lakh trip.

He further explained that credit card use also draws high ATM cash withdrawal charges — usually between 2.5–3.5% of the amount withdrawn (subject to a minimum fee), plus interest from day one and the forex mark-up on top. "A single ATM withdrawal on a regular credit card can therefore cost the traveller 6–8% before they have even spent the cash,” Bagree noted.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.