Prepaid cards: Convenient and inexpensive
The most convenient and inexpensive way to carry money abroad is the prepaid forex travel card. State Bank of India (SBI), Axis Bank, HDFC Bank, ICICI Bank, etc, and non-banking players like Centrum Direct and Thomas Cook offer these.
Some might charge you a nominal amount of Rs 100-150 for issuing the card, while others could give it free of cost. After you have filled the form and submitted your KYC (Know Your Customer) documents, you will have to remit an amount (equivalent to the sum you want in foreign currency) to the card provider. The exchange rate prevailing that day will be applied and an equivalent amount of foreign currency deposited in your prepaid card. These cards usually get activated within a couple of hours. Some of these are single-currency and others are multi-currency. The latter are valid for a few years and useful for travellers who go abroad regularly or visit multiple countries on one trip.
Prepaid travel cards are quite secure. "Somebody needs to have both the card and the PIN to be able to access your money," says Mahesh Iyer, chief operating officer, Thomas Cook (India).
Experts warn that as far as possible, you should use the card to make payments for goods and services. Don't use these to withdraw money from ATMs, or at least don't do so frequently. "If you withdraw cash at an ATM abroad by using these cards, you will be levied a fee per transaction that could range from 0.75 cents to $2," says T C Guruprasad, chief executive officer and managing director, Centrum Direct.
Prepaid cards allow you to lock-in the exchange rate before the trip. The rate that applies is the one on the day of purchase of the card. If you were to use a credit card abroad, the exchange rate would be the one that prevails on the day of billing. Since the rupee mostly depreciates against the dollar, it is wiser to lock-in your rate before the trip.
Prepaid travel cards can be topped up whenever you run out of money. You can do this both online and over the phone by first remitting the required amount in rupees from your savings bank account to the card provider's account. The equivalent amount of foreign exchange is then deposited in your card.
Prepaid cards also offer supplementary benefits. Some come with a health insurance cover. Most providers also offer an emergency cash service. "If you lose your card, you can call a toll-free number. We will arrange for emergency cash. We will also ship a supplementary card within 48-72 hours," says Iyer. When you return to India, you may have foreign currency left in the prepaid card. You can return it to the issuer at the prevailing rate.
Avoid using credit and debit cards abroad
If you use your credit card for a purchase abroad, a fee called acquiring the cross-currency charge is levied. "This could be 1.75-3.5 per cent. The bank abroad will charge the card issuer bank in India a certain exchange rate, into which a mark-up will be built in," says Guruprasad.
When you withdraw cash from an ATM abroad through a credit card, you could be slapped a heavy charge of $10-25 per withdrawal.
Go light on cash
Although the Reserve Bank of India allows you to carry up to $3,000 in cash while travelling abroad ($10,000 over multiple holiday trips in a year), you should actually carry much less. If you are going to a developed country, most hotels, shops and even cabs will accept plastic money. You are only likely to need cash to pay at small restaurants, for street-side shopping, and to pay tips. Only if you are going to a destination is far removed from civilisation, say, a jungle safari in Kenya, should you carry more cash. Cash is the riskiest way to carry money. Says Vijay Jasuja, chief executive officer, SBI Card: "Loss of forex online in an international destination can cripple your spending and travel plans." Iyer suggests you avoid carrying more than 20 per cent in the form of cash.
Source : www.business-standard.com/article/pf/prepaid-forex-cards-the-best-way-to-carry-money-abroad-116042400732_1.html