Forex card, credit card or cash abroad?
By Ganesh ·
How Indian travellers should pay abroad. Forex cards, credit cards and cash compared, fees and markups, TCS, RBI cash limits, UPI abroad, common mistakes and the best mix for each destination.
The short answer: for most trips abroad, carry a mix: a forex card loaded in the local currency for everyday spending and ATM cash, a credit card (ideally a low or zero forex-markup card) for hotels, car hire and emergencies, and a little cash in local currency for taxis and small shops on arrival. Always choose to pay in the local currency, not rupees, when a card machine asks. Forex cards lock in an exchange rate and avoid card markups; regular credit cards are convenient but usually add a 2–3.5% markup plus GST on it.
Fees, limits and tax rules below are approximate and change. Check with your bank before you travel.
The three options compared
| Forex card | Credit card | Cash | |
|---|---|---|---|
| Exchange rate | Locked when you load (bank's card rate) | Rate on the day of the transaction + markup | Rate when you buy (wider spread at airports) |
| Typical extra cost | Small spread on loading; ATM fees abroad | 2–3.5% markup + 18% GST on the markup (lower on zero-forex cards) | Exchange spread; no fees after that |
| Safety | PIN-protected, can be blocked, not linked to your bank account | Strong fraud protection; can be blocked | Lost is lost |
| Accepted for hotel and car-hire deposits | Sometimes refused | Yes, best option | Rarely |
| Best for | Daily spending, budgeting, students | Big bookings, deposits, emergencies, rewards | Taxis, street food, tips, markets |
Forex cards
A prepaid card from your bank or a forex company, loaded in one or several currencies (US dollars, euros, pounds, dirhams, baht and others). You lock in the rate when you load, so the rupee falling during your trip doesn't affect you.
- Pros: predictable costs, lower conversion charges than most credit cards, works at ATMs and shops worldwide, no link to your savings account.
- Cons: fees for ATM withdrawals, cross-currency use (spending dollars in a country that uses euros), reloading and inactivity; some hotels and car-hire firms don't accept prepaid cards for deposits.
- Tip: load the currency of the country you're visiting, keep a backup card, and get unused balance refunded or keep it for the next trip.
Credit cards
- Pros: universally accepted, best for hotel and car-hire deposits, strong fraud protection, rewards and lounge access on many cards.
- Cons: forex markup of about 2–3.5% plus GST on most cards; cash withdrawals abroad attract high fees and interest from day one.
- Zero-forex cards: several Indian banks offer cards with low or no markup, worth getting if you travel often.
- Before you go: enable international usage in your bank app and note the bank's international helpline.
Cash
- Carry enough local currency for your first day: airport taxis, SIM cards, snacks.
- Buy from your bank or an authorised money changer before you leave; airport counters usually give the worst rates.
- Limits apply: RBI rules cap how much foreign currency cash you can buy for a trip (generally up to US$3,000 equivalent for most countries), and you must declare large amounts of foreign currency when you arrive back in India.
- In Thailand, Vietnam, Bali and Japan, small shops and street food are often cash only.
Tax collected at source (TCS)
Loading a forex card or sending money abroad counts as a remittance under the RBI's Liberalised Remittance Scheme. Above a yearly threshold (₹10 lakh per person from April 2025), tax is collected at source on the excess, which you can later claim against your income-tax liability. Card spending abroad on an international credit card is currently treated differently. Check the latest rules with your bank or tax adviser for large trips.
Avoid these common mistakes
- Paying in rupees abroad: when a card machine or ATM offers to charge you in INR ("dynamic currency conversion"), say no. Choose the local currency. The "convenience" rate is usually much worse.
- Withdrawing cash on a credit card: high fees and interest from day one.
- Relying on one card: carry at least two cards from different banks, kept in different bags.
- Forgetting to tell your bank: enable international transactions and contactless use before you fly.
UPI abroad
UPI payments now work at some merchants in a growing list of countries (including the UAE, Singapore, Nepal, Bhutan, Mauritius and Sri Lanka) through partnerships with local payment networks. Coverage is patchy, so treat it as a bonus, not your main way to pay.
Suggested mix by destination
- Thailand, Vietnam, Bali: forex card + 20–30% of your budget in cash; credit card as backup.
- Dubai, Singapore: cards everywhere; little cash needed.
- Europe, UK, US: credit card (zero-forex if possible) + forex card; minimal cash.
- Japan: cards widely accepted in cities, but carry cash for smaller places; load an IC card for trains.
Keep a note of your budget and spending per day in your Sancharees trip, so everyone travelling together can see who paid for what.
FAQ
Is a forex card better than a credit card?
For everyday spending, usually yes, it avoids credit-card markups and locks in the rate. For deposits and emergencies, a credit card is better. Carry both.
Which is the cheapest way to pay abroad from India?
A zero-forex-markup credit card or a forex card, used in the local currency, and as little airport cash exchange as possible.
How much cash should I carry abroad?
Enough for one or two days of small expenses, plus more in cash-heavy countries. Stay within RBI limits.
Photo: Exchange Money Conversion to Foreign Currency by epSos.de, CC BY 2.0 (Wikimedia Commons)
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