International travel has always given people headaches. The biggest point of concern has mostly been FOREX. What is the right amount of forex to carry? A little more means double fees on the unutilized forex, a little less means cash crunch in foreign lands. For tricky situations like these, Credit Cards are the handiest tool. However, there are certain concerns that most people have used credit cards abroad. Let me bust them for you.
Credit Cards have very high fees when used internationally?
Agree and disagree with both. Yes, the fees are very high on basic and lower end credit cards. It may range from 3-4% plus taxes. However, there are card variants where these fees as low as 1.75-2%. Also, if you join the HDFC Global Program, you can get 1% cash back, making the effective fees at only 1% plus taxes. Some of you might argue that even 1% is a charge. I would beg to differ here if you exchange forex for cash too, there is some float which the forex agent would charge you, and typically it can range between 0.5-2%.
Why is it suggested to use Credit Cards even with 1% fees?
This is where it gets interesting. If you use an HDFC Diners Black Card which has 1% fees (after the cash back from Global Value Program), it has gives you reward points worth 3.3% making it a net discount on forex currency purchase of ~2% (net of taxes). This is cool as you are not only paying any forex markup charges but also getting reward points.
Will domestic cards not work globally?
This is another wrong misconception which people have. A credit card is as good to be used to be in international POS as in your own country, provided the POS is served by the service provider (AMEX, VISA, MC, etc.), which is true in most cases.
What if I lose the card?
Losing the sole card which you are carrying can be a tricky situation. But most credit card companies provide emergency replacement service (albeit at a fee) in most international countries where they have a service branch. However, it is also advised to get yourself with suitable travel insurance, with which you can get the fees reversed and even get emergency assistance.
To conclude:
Credit cards are a handy tool while traveling abroad; it is safe, rewarding, and comfortable. You should adopt in your next international travel and notice the difference it makes to your total bill. To conclude
Credit cards are a handy tool while traveling abroad; it is safe, rewarding, and comfortable. You should adopt in your next international travel and notice the difference it makes to your total bill.