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Forex cards are prepaid cards with which you can conduct transactions in foreign currency without incurring any fee for such transactions. As compared to credit cards that charge foreign exchange mark-up fee (ranging from 1.75% to 3.5%) over and above the exchange rate, Forex Cards are very economical as they carry no charges per transaction. They can be used like any other debit card. However, unlike debit cards, they are not linked to a bank account.
Key Highlights of Forex Card |
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The many benefits of Forex Cards are given below:
Protection from Volatility – The exchange rate changes from time to time. When the market is in turmoil the rate change will be frequent. So if you want to safeguard yourself against a volatile exchange rate then get a forex card. The volatility does not affect forex cards as the foreign exchange conversion rate is locked when you load money into it.
Zero or Minimal Foreign Mark-up Fee – Usually travel cards do not incur a mark-up fee when a transaction takes place in a foreign land. Mark-up fee is applied when Indian currency is used to pay for a foreign currency transaction. Forex cards, however, are already loaded with foreign currency and thus don’t incur mark-up fee.
Low ATM Withdrawal Fee – Using a travel card to withdraw cash is comparatively cheaper than a credit card.
Security – Forex credit cards are much more secure than cash. You can easily block the forex card in case it is lost or stolen.
Global Student Identity Card – A top advantage for students is the ISIC Student ForexPlus Card. This forex card acts as both a global student Identity Card and a forex card.
There are two types of travel cards provided to foreign travellers. These are:
Single Currency ForexCard – In this travel card, you can load just one currency. Choose this variant if you plan on visiting only one country.
Multi-currency ForexCard – Here you can load multiple currencies on the credit card. They come with additional benefits. This variant is best suited if you plan to travel to different countries.
Forex cards have a lot more to offer to customers than credit cards when it comes to foreign travel. See below for comparison.
| Category | Forex Card | Credit Card |
| Foreign Currency Mark-up Fee applied on all transactions | No | Yes |
| Exchange Rate | Applied once at the time of card loading | Applicable at the prevailing rate on every transaction |
| Supported Foreign Currency | Available in 15-20 foreign currencies | Available in most foreign currency |
| Credit Extended | No | Yes |
| Insurance Cover | Certain cards provide it | Available with certain cards |
Let us understand this in some detail:
Foreign Currency Mark-up Fee – Forex cards don’t charge you a mark-up fee every time you make a foreign transaction. However, credit cards charge you anywhere between 1.75% & 3.5% on all foreign transaction.
Suggested Read: Foreign Transaction Fee on Credit Cards
Exchange rate – The exchange rate is not applied every time you use your travel card. It is just applied at the time of card loading. However, in case of credit cards, the exchange rate may vary on different dates. This can be quite a costly affair if the rate fluctuates too much while you are travelling.
Supported Foreign Currency – Forex cards support only a limited number of currencies and most cards support only 3 currencies, US dollar, Euro, Pound Sterling. However, credit cards can be used to pay in almost all foreign countries.
Credit Extended – Forex cards are a prepaid card. You load them up with foreign currency and then use it. They do not provide you with a credit line like credit cards.
Insurance Coverage – Many credit cards and travel cards provide insurance and overseas hospitalisation coverage to their customers.
| Note:
When travelling to a foreign country, we suggest that you take along all three forms of monetary instruments i.e., Cash, Forex Card, Credit Card. This will ensure that you get the benefits of all three instruments. |
Which Forex card should I apply for?
First, you should decide whether you are going to require Single Currency Forex Card or Multi-Currency Forex Card. Afterwards, you can decide from one of the following most requested travel cards in the market:
Is there a daily spend limit on Forex cards?
Yes, many forex cards limit the amount of daily transactions that can take place on the card. For cash withdrawals, it is usually about USD 1,000 and for merchant transaction, it is about USD 10,000.
Should I not take along my credit card?
We suggest that you get a forex card along with credit card and cash. A credit card can be useful if you exhaust your forex card or run out of cash. This is because credit cards extend you credit up to your credit limit. This credit limit is provided even on foreign transactions.
Can I use my Forex card to make online transactions?
Yes, you can use your forex card to make online payments in stores located overseas. The advantage forex cards provide you is that you will not have to pay mark-up fees.
Is cash better than forex card?
Cash payments will not incur you any loading fee or ATM withdrawal fee, etc. However, cash does not provide you with the same security that a forex card can provide you.
