If you’re planning an international trip or you’ll be moving overseas for higher education in near future, you must acquaint yourself with some financial practices to save more money. It’s crucial to learn about the major differences between Forex cards and credit cards and to make the best choice between the two. Making the right choices will help you save money on tickets, and other expenses. 

Credit cards

Credit card use can be a convenient way to make purchases and manage finances, but it's important to use them responsibly. Before using a credit card, it's crucial to have a budget planned. Knowing how much you can afford to spend and keeping track of your expenses can help prevent overspending. Most banks offer additional perks like add-on benefits and extra points when using credit cards. 

Forex cards

A Forex card is specifically used as a prepaid travel card for international travel. These cards are preloaded with the currency of the country you plan to visit. This helps you avoid the hassle of carrying large amounts of cash and eliminates the need for currency conversion each time you make a purchase. 

You can pay while shopping and withdraw money with ease during your travel. These are most commonly used by frequent travellers and students studying abroad. From October 1, 2023, foreign exchange cards are subject to a 20% Tax Collected at Source (TCS) on purchases exceeding Rs 7 lakh annually. Simply said, if the balance on Forex card exceeds Rs 7 lakh limit, you will be required to pay an additional 20% at the time of purchase or when loading funds onto the card.

Credit cards, however, might offer more favourable exchange rates and reward points for future use, but they could also involve additional costs like international transaction fees.

Here are some major differences between these two types of cards:

•    Forex cards may have fees such as issuance fees, reloading fees, ATM withdrawal fees, and inactivity fees. However, they do not accrue interest since they are prepaid. Credit cards often come with interest charges if you carry a balance from month to month. They may also have additional charges like annual fees, late payment fees, and foreign transaction fees.

•    Since Forex cards are prepaid, there are no late payment penalties or high interest rates associated with credit cards for late payments.

•    Forex cards help with budgeting since you can load them with a specific amount of money for your trip. They do not allow you to borrow money, so there is no risk of debt. Credit cards offer the flexibility to make purchases even if you don't have the funds available immediately. This could mean that you may spend more that you need to. 

•    If you are a student travelling abroad, look for forex cards with low or no issuance fees, reloading fees, and transaction fees.

Ultimately, the choice between Forex cards and credit cards depends on your travel habits, spending preferences, and financial priorities.

Some prominent Indian banks that offer Forex cards are:

•    HDFC Bank offers the Forex Plus Card, available in multiple currencies, with features like zero cross-currency conversion charges, emergency cash assistance, and insurance coverage.

•    SBI offers the Foreign Travel Card. It provides benefits such as contactless payments, insurance coverage, and 24/7 customer support.

•    ICICI Bank provides the Travel Card, which allows travellers to load up to 15 currencies on a single card. Some additional benefits are also offered. 

•    Axis Bank offers the Multi-Currency Forex Card, allowing travellers to load up to 16 currencies on a single card. It comes with features like emergency assistance services, and SMS alerts for transactions, etc.