International travelers get all the facility to transact abroad when they carry a travel credit card or forex prepaid card Or both. These cards allow them to spend at merchant outlets, book tickets, withdraw cash from ATMs, etc. This piece will help you understand the difference between a travel credit card and a prepaid forex card.
travel credit card, These cards usually cater to customers who spend a lot on travel. However, if travelers withdraw foreign currency from ATMs abroad, the card becomes costly. They have to pay finance charges, forex transaction fees and withdrawal fees.
Forex Card: A forex card is a pre-loaded forex card that allows you to make purchases, withdraw cash in foreign currency, and enable you to spend on your foreign trips.
Raj Khosla, Founder and MD, MyMoneyMantra.com said that forex cards are charged every time the currency is reloaded or the card is renewed. “The other is a cross-currency charge. This applies when you spend in a currency other than the currency on the card,” Khosla said. However, you can choose to load it in the currency of the country you are traveling to or opt for a multi-currency forex card if you plan to. On traveling to different countries. As long as you pay in the currency available on your forex card, no markup charges will be charged, making it the most economical option as compared to travel credit cards.
which is better?
Sachin Vasudev, associate director and head of credit cards, Paisabazaar.com said that travel cards offer travel-centric benefits such as complimentary lounge access, earning air miles, additional benefits on travel bookings, and more. However, most of these do not feature low/any foreign currency markup charges, which comes as a major disadvantage for international travelers. Even if a card is rewarding you handsomely for international transactions, if cross-currency markup charges are applied at normal rates, the actual value will be zero or even a loss.
Sudarshan Motwani, Founder and CEO, BookMyForex said, “Since forex cards are a uniquely priced prepaid instrument, your regular bank account/credit card is not exposed to any risk. Also, in the case of forex cards In the U.S., the exchange rates are closed on the day of loading, while credit cards accept the exchange rate prevailing as on the settlement date. Therefore, if the rates are higher on that day, you will incur additional losses.”
However, experts also suggest keeping travel credit cards as a backup option.
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