When you travel abroad, how do you carry the money? Cash or travellers cheques, right? Now, there is a third alternative which offers the best of both: A travel card.
The Emerging Trend
The economy in India is booming, and people are earning unprecedented salaries (or profits from business). And people spend a lot more these days, quite unlike the people even one generation older.
The spending can be on houses, cars, big ticket electronic items like LCD TVs or home theater systems. But apart from these, people are also spending more and more on foreign travel.
With the cost of airfares very low, many people are travelling to countries outside India. Especially when fares to many near-by countries are lower than some of the domestic fares!
The Big Question – How to Carry Money?
When you travel within India, this is kind of easy – it can be cash, or a debit card, and maybe your cheque book.
But when it comes to foreign travel, it gets a little more complicated – especially because you are dealing with a foreign currency.
Till now, the most popular options for carrying money while travelling abroad were cash and travellers cheques.
When you carry cash, you just need to buy the foreign currency from an authorized dealer or bank. There is no hassle while spending – you just tender the cash, and you’re done! Buy carrying cash is not safe, and once stolen, it is gone forever.
When it come to travellers cheques, you again need to buy them from authorized dealers or a bank. But when you want to spend, you have to encash them, and you might have to pay a commission or a fee for this.
A new option has emerged, which brings the benefits of cash and travellers cheques together – a Travel Card.
What is a Travel Card
A travel card is an electronic card, very similar to a debit card. It is a pre-paid card – you buy and “load” the card with foreign currency in India.
You can use it just like a debit card in a foreign country at any establishment that accepts Visa cards. Apart from this, you can withdraw cash from any Visa ATM.
Isn’t this the direction to go, after e-stocks (demat stocks) and e-Gold? (To know more, please read “After e-Stocks, now its time for e-Gold – Gold ETFs”)
Advantages of a Travel Card
Convenience: The travel card is definitely convenient – you can spend your money as if you are using a debit card.
Insurance Benefits: This is a big plus – the travel card comes with insurance benefits. The exact benefits depend on the bank issuing the card, but you can expect insurance for the following:
- Personal accident
- Loss of travel documents
- Missing connecting flight
- Delay in flight due to delay in receiving checked baggage
The insurance benefits start once you buy the card, and remain in force as long as the card is active and has a balance.
Replacement Card: In case you lose cash, it is gone for ever. In case you lose travellers cheques, you have to go to the issuing agency or its agent in the foreign country for canceling the old cheques and issuing new ones.
In case of a travel card, usually, banks give you an upfront replacement card. So, if you lose your card, you just call up the agency to cancel it, and immediately start using the replacement card!
Again, very convenient.
Online Access: Most banks also offer online access for your travel card. Here, you can see the card statement: you can see a list of all the transactions, and you can see the balance.
How Much Money Can You Carry
The Reserve Bank of India (RBI) stipulates that a person can not buy more than $10,000 (or its equivalent in other currencies) per year for one or more leisure foreign trips.
The same limit applies to a travel card – the maximum forex you can buy is US $10,000.
You would get the foreign exchange at the same rate at which you would get cash or travellers cheques. It would be the prevailing market rate – which is slightly higher than the rate at which banks buy forex from each other (this is the rate that we read in newspapers).
This exchange rate at which you buy foreign exchange for your travel card can vary slightly between banks offering the card.
Which Banks Offer a Travel Card
The leading banks of India offer a travel card. HDFC bank offers it as “ForexPlus”, SBI offers it as “Vishwa Yatra Foreign Travel Card”, while ICICI Bank doesn’t have a specific branding for the card, and offers it as “ICICI Bank Travel Card”.
Currencies Available with a Travel Card
Depending on the issuing bank, the card can be available in any one of the following currencies:
- US Dollar
- Pound Sterling
- Canadian Dollar
- Japanese Yen
- Australian Dollar
- Swiss Francs
Each travel card is issued for a specific currency (which is the base currency of the card), and it can be one of these. If you spend in a currency other than the base currency of the card, the transaction would happen at the prevailing exchange rate between those two currencies.
Formalities / Paperwork Involved
Since we are dealing with forex here, there are some formalities involved.
You would need the following paperwork / documents:
- Copy of passport
- Copy of confirmed tickets
- Copy of PAN card / Form 60
- Statement of purpose of your visit (Form A2)
- Declaration that you haven’t exceeded your $10,000 yearly foreign exchange quota (Basic Travel Quota – BTQ – From)
Costs Involved with a Travel Card
Joining: You pay an upfront, one-time fee when you buy the travel card. This ranges from Rs. 110 to Rs. 150.
Reload: The initial loading of the card (with foreign exchange) is free. For all subsequent loadings of the card, a fee is charged. This varies from Rs. 50 to Rs. 100 per reload.
Use at a Merchant: There is no fee charged by the bank for using the card at a merchant establishment. (The merchant / shop might charge a small fee in some rare cases).
ATM Withdrawal: There is a fee charged for each withdrawal from an ATM. It ranges from $1.50 to $2.00 per withdrawal.
ATM Balance Inquiry: There is a fee charged for balance enquiries at ATMs. This fee is usually around $0.50
What if You Don’t Spend All the Foreign Exchange (Forex)
If you have a balance on the card when you return from your trip, you can go to the bank and encash the travel card to get back your money.
The exchange rate applicable would be the prevailing exchange rate, and the amount would be deposited directly to your bank account.
In most cases, banks do not charge a fee for encashment. But this may depend on the period between the date of your arrival and the date of encashment of the travel card.