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Travelling has become the new normal, whether it is for leisure or a commercial motive. However, if it is about going on a vacation abroad, the expenses involved in the entire trip can be inevitably high. Using a conventional mode of transaction such as cheque or carrying a large amount of cash can never be a good idea. This is why people prefer to use a credit card for huge transactions abroad.
Now, the problem arises when you have to transact only in the currency of that country, and your native currency will not be accepted. This is where the forex card comes into play.
This article will go into the details of what a forex card is and its benefits over a regular credit card.
What is a Forex Card?
Forex cards are prepaid foreign currency-denominated cards in which one can load foreign currency at a locked-in rate. One of the main benefits of forex cards is that, unlike credit/debit cards, they allow you to lock in the forex exchange rate at the time of loading.
There are some prepaid forex travel cards in which you can pre-load up to 15 currencies at a time.
How Does a Forex Card Work?
Forex cards work similarly to a debit or credit card but are specifically designed for international payments.
Once the card is loaded with a foreign currency, you can use it to make payments or withdraw cash in the local currency of the destination country. You can even reload the card if you run out of funds.
How To Load Money In A Forex Card?
Here are 5 easy steps to load money in a forex card given below:
- Login to the web portal of your bank’s forex card service.
- Proceed to the reload forex card page.
- On this page, you have to choose the type of your forex card— single-currency or multi-currency forex card.
- Next, you have to choose the currency type in which you want to load money, and then enter the amount to be loaded in the card.
- Press the proceed in the end. The funds requested will automatically credit to your forex card account in the desired currency at the exchange rate that is prevailing at the time of your transaction.
Note: Soon after the requested funds have been successfully added to your forex card account, you will receive an email alert from your forex bank on your registered mail ID. Carefully, check the mail and save it for reference.
How is a Forex Card Better Than The Credit Card?
There are several shortcomings of using your bank credit card in a foreign land that can be effectively addressed by a specialised forex card.
Here are various ways how a forex card excels over a credit card:
Saves you from the Floating Currency Rates
One of the key forex card benefits is that forex card rates are not market-dependent, and hence, don’t fluctuate. When you load your forex card, the prevailing foreign exchange conversion rate will be locked at the time of loading. Whereas, if you use a normal credit card, the forex at the time of swiping your card shall apply.
No ATM Charges
It is a well-known fact that a credit card is quite a costly means of transaction. This is because there are a lot of charges applicable to the use of credit cards, viz. maintenance fee, bank interest and forex card atm withdrawal charges. However, an important thing that you must not miss out is that just like your credit card is primarily designed for domestic transactions, the forex card is programmed for foreign transactions. Hence, your bank will levy an additional charge for your withdrawal of cash using a forex card outside the home country.
You Can Skip the Forex Mark-up Fee
Whenever you use a credit card or a forex card abroad for paying in foreign currency, you will be levied an additional fee above the transaction. This is called mark-up fee, which banks and credit card networks such as VISA and mastercard levy at the rate of 1% to convert the currency denominations. Now, in the case of a credit card, this mark-up fee is mandatory. This markup fee is charged on a forex card only if you transact outside the currency jurisdiction, i.e. outside the country where that currency is prevalent. Moreover, while using a forex card, you can avoid this charge by opting for the multi-currency forex card.
Avoids Conversion Charges
Apart from the markup fee, the banks and credit card networks charge the currency conversion charge for every international transaction. In case of a forex card, this fee is not charged since the currency has been converted only once, i.e. at the time of loading the forex card.
No Late Fee
One logical benefit of using a forex card is that there is no scope of late fee being charged. Late fee is charged if you don’t pay the credit bill on time, along with the interest. In a forex card, you already load money before using the card. Hence, no bill is generated on any transaction.
These are the five ways how a forex card proves as a more efficient means of transaction over a bank credit card while you are travelling overseas.
Safeguard your Trip with Travel Insurance
Suppose you are on a venture to explore Dubai and you happen to lose your passport at an event. Then, while a forex card will help you easily pay for a duplicate passport, your Dubai travel insurance will ensure that the costs can get reimbursed once you go back to your home country.
An International travel insurance shall also provide coverage in medical and non-medical emergencies by covering scenarios such as emergency hospitalisation, loss of baggage, trip interruptions etc. as per the policy terms and conditions.
Therefore, if you are planning to embark your journey overseas, you must not miss out on the most essential preparation- securing your trip with travel insurance.
>> Also Read: How to Plan your International Travel Budget?
Disclaimer: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.
