Travelling is all about the allure of exploring new places, meeting people, experiencing new cultures and taking in the natural wonders that are too hard to resist. During the journey, with the excitement, you may also encounter several difficulties. One of the most common issues many faces when travelling from one country to another is foreign exchange and getting the best exchange rates. Not to mention, the various charges associated with swiping your credit/debit cards can cut into your travel expenses as well. Here, Forex card comes to the rescue. It is a hassle-free way to get the much-needed foreign currency.
What is a Forex card?
A Forex card, also called a foreign exchange card, is a prepaid travel card used by international travellers to carry foreign currency securely and conveniently. You can load it with multiple currencies, swipe it like a debit card or use it to withdraw cash from ATMs abroad. You can also refill the card whenever required.
Forex cards help you avoid high currency conversion charges and transaction fees associated with credit or debit cards. The exchange rate is fixed at the time of loading, protecting you against future rate fluctuations.
Forex cards are typically issued by banks, travel agencies and Forex and financial service providers.
Key benefits of using a Forex card
Forex cards are a better alternative to credit or debit cards for international travellers as they offer better currency control, security and savings. Here are some advantages of them:
Customisable options
Forex cards are available in different variants to meet the unique needs of travellers. Whether you're a student studying abroad, a business professional or a frequent backpacker, there’s a card tailored for you. You can choose between single-currency and multi-currency cards, or opt for specialised cards that offer added perks—like fee waivers or discounts on cross-border transactions for frequent travellers.
Locked-in exchange rate
Forex cards are pre-loaded with the forex amount and serve as a great hedge against the volatility of currency prices. The rates offered with a Forex card are always better as, unlike credit/debit cards, the rate of exchange is not pre-determined by banks. Rather, they are based on the exchange rate of the day which remains fixed. This also allows the user to load the forex value on the card in advance, especially when these values are good.
Lower fees
Prepaid Forex cards are cheaper to use too. Most of these offer the first three transactions for free, with subsequent transactions being charged at a maximum of USD 2. On the other hand, debit/credit cards charge a flat fee to the tune of ₹300. Another benefit is that Forex cards are devoid of ATM charges, which are usually levied by other cards up to 3%.
More security
Just as in the case of credit/debit cards, a Forex card can be blocked instantly in the unfortunate event of it being lost or stolen. However, in contrast to the former, the funds in a Forex card can be instantly transferred to a new account, thus making it more flexible, functional and convenient. Some companies also give an additional card that can be activated instantly, in case the primary Forex card is lost.
Widespread acceptance
Forex cards are gaining increased acceptance in countries around the world. They are now being accepted not only in big shopping malls, restaurants and fancy hotels, but also in taxis and local shops.
Difference between Forex card & other payment options
When travelling abroad, choosing the right payment method can greatly impact your expenses and convenience. Here’s a quick comparison between Forex cards, credit/debit cards, and cash to help you decide what suits your travel needs best.
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Feature
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Forex card
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Credit/Debit cards
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Foreign currency
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Exchange rate
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Fixed rate at loading, protecting from fluctuations
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Dynamic
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Can vary widely, the
rate depends on when & where you exchange
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Transaction fees
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Typically low or none for purchases and ATM withdrawals
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Often charged a markup fee between 2–3% of the transaction value
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Exchange fees may apply
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Security
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PIN-protected, easy to block if lost, includes insurance
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Has fraud protection, but theft can expose your bank balance
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High risk of theft or loss
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Currency support
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You can add single or multiple currencies on one card
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Can load only one currency per account
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Physical cash only; different countries require different currencies
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Refilling
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Can be easily refilled online
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The bank account funds vary as you spend or deposit
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Must physically acquire more
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Things to know before using Forex cards
When choosing a Forex card for your travels, it’s important to understand the key factors that can affect your experience and expenses. Keeping these points in mind will help you ensure smooth transactions abroad.
1. Be aware of applicable charges
Before applying for a Forex card, understand all associated fees such as card issuance charges, cross-currency fees and replacement card costs. Knowing these will help you choose a cost-effective option and avoid surprise deductions later.
2. Compare card options across providers
Different banks and financial institutions offer various Forex card features and benefits. Take time to research and compare multiple options so you can select one that best fits your travel and spending needs.
3. Understand transaction limits
The Forex card has a predefined daily withdrawal or spending limit, which can vary by provider. Being aware of these limits helps you plan your expenses better and avoid payment rejections while travelling.
4. Check reload flexibility
Choose a Forex card that allows easy and instant reloading, especially online. This is particularly beneficial during emergencies when you might need to top up your balance quickly.
5. Know the insurance benefits
Many Forex cards come with built-in insurance benefits, such as protection against theft, loss or fraud. Confirm the type and extent of coverage with your card issuer to ensure you're adequately protected during your travels.
Role of travel insurance when using Forex cards on your international trip
Although Forex cards often come with insurance benefits provided by the issuing bank in collaboration with insurance companies, they are limited. The coverage may include card theft, loss of personal documents, baggage delays and even air accident death. While these perks offer a layer of protection, it’s important to note that the scope of such coverage is quite restricted.
Medical expenses, emergency evacuations or major trip disruptions are typically not covered under Forex card insurance. This is where a comprehensive overseas travel insurance plan becomes essential. It provides broader protection—ranging from medical emergencies and hospitalisation to trip cancellations and more. So, while a Forex card complements your travel safety with limited benefits, it cannot substitute a full-fledged travel insurance policy when travelling internationally.
Conclusion
The cost-effectiveness, convenience and security that Forex cards offer make them an appealing alternative to conventional debit/credit cards. While planning your next journey, consider a Forex card as well as travel insurance for a smooth and peaceful trip.
You can obtain a Forex card and travel insurance online easily from the comfort of your house.
FAQs
1. What are the eligibility criteria to apply for a Forex card?
To be eligible to apply for a Forex card, you must be an Indian citizen holding a valid passport.
2. What are the documents required to apply for a Forex card?
When applying for a Forex card, you have to submit the following supporting documents:
- Valid passport
- A2 form
- PAN card
3. For what purpose you can apply for a Forex card?
You can apply for a Forex card to manage the following activities in a foreign land:
- Expenses of leisure trip
- Course fees and living costs of studying abroad
- Cost of medical treatment abroad
4. Can you use a Forex card for cash withdrawal?
Yes, a Forex card can be used to withdraw cash from ATMs in foreign countries. However, banks may charge a nominal ATM withdrawal fee and limit the amount per day. So, check the specific terms with your card issuer.
5. Is a visa needed to get a Forex card?
No, a visa is not mandatory to get a Forex card. You only need valid travel documents like your passport, confirmed air tickets, and sometimes basic KYC documents. Requirements may slightly vary by bank, so it’s good to confirm with them directly.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.