Travellers who often visit foreign countries can use their credit card to make international payments. Credit card payments are much more secure than cash or travellers cheques. This security and convenience come at a price which is known as a foreign transaction fee. Whenever you conduct a transaction overseas, banks and credit card networks charge a fee to convert the denominations. The fee ranges from Nil to 3.5% across credit cards. Usually, premium credit cards with high annual fee offer a low forex markup fee, but this may vary from one issuer to another. Please see below for more details on low or zero forex markup credit cards.
When is Foreign Transaction Fee on Credit Cards Applicable?
A foreign transaction fee is applied in the following situations:
- Retail transactions made outside of India
- Online transactions made in a foreign currency
- ATM cash withdrawals made overseas
- Transactions made in India where the POS machine is linked to an overseas account like those at Duty-Free shops
- Any other transaction made in foreign currency
Suggested Read: Best Credit Cards for International Travel
How Do Foreign Transaction Fees Work?
From a bank’s perspective, you can conduct only two types of foreign transactions namely:
- Foreign Transactions in United States Dollar
- Foreign Transaction in any other currency
Foreign Transactions made in United States Dollar
When you conduct a transaction in USD, your Indian credit card first converts the amount into Indian Rupee. They then apply the foreign transaction mark-up fee on the amount. You will have to pay this amount as the Forex Mark-up Fee.
Foreign Transaction Fee Calculation
For example, if you purchased an item worth 100 USD and the exchange rate is 1 USD = INR 70. In this case, the payable amount in INR will be Rs. 7,000. Now if the foreign exchange mark-up fee is 3.5%, it will be Rs. 245 (3.5% of 7,000). GST at 18% will also be applicable on the fee amount.
Foreign Transaction made in any Other Currency
In some cases, when you conduct a foreign transaction in any currency other than US dollars then the amount is first converted into US dollars. Afterwards, the usual process takes place and the amount is converted into Indian Rupees. The mark-up fee is applied at this juncture and the final amount shows up on the customer’s credit card statement.
Top Credit Cards with Lowest Forex Transaction Fee
Federal Bank Scapia Credit Card
Joining fee: ₹0
Annual/Renewal Fee: ₹0
Up to 20% Scapia coins on your spends
Zero forex mark-up fee with unlimited access to domestic airport lounges
Product Details
- 20% Scapia coins on travel bookings made on Scapia app
- 10% Scapia coins on online & offline purchases, where 5 Scapia coins = Rs. 1
- Zero forex mark-up fee
- Unlimited domestic airport lounge access on spending min. Rs. 10,000 every month
- Lifetime free credit card
Ixigo AU Credit Card
Joining fee: ₹0
Annual/Renewal Fee: ₹0
10% discount on travel bookings at Ixigo
4X reward points on train bookings via Ixigo
Product Details
- 10% discount on bus bookings, max. Rs. 300 once per month via Ixigo
- 10% discount on flight bookings, up to Rs. 1,000 once per month via Ixigo
- 10% off on hotel bookings, up to Rs. 1,000 once per month via Ixigo
- Zero forex markup fee
- 16 free visits to domestic airport and railway lounges and 1 free visit to international airport lounge per year
RBL Bank World Safari Credit Card
Joining fee: ₹3000
Annual/Renewal Fee: ₹3000
0% forex markup fee
Accelerated rewards on travel spends
Product Details
- 0% forex markup fee
- 10,000 travel points on Rs. 2.5 Lakh annual spends & 15,000 travel points on Rs. 5 Lakh annual spends
- Rs. 10,000 gift card by brands like Taj, Amazon, Croma, Myntra & MMT on Rs. 7.5 Lakh annual spends
- Fuel surcharge waiver up to Rs. 250 per month on fuel spends of Rs. 500 to Rs. 4000
IDFC FIRST Mayura Credit Card
Joining fee: ₹5999
Annual/Renewal Fee: ₹5999
10X rewards on monthly spends above Rs. 20,000; 5X rewards below that
Up to 8 international, 16 domestic (+4 guest visits) lounge access per year
Product Details
- 1X rewards = 1 Reward Point per Rs. 150 spent
- No forex mark-up fee; Reimbursement of up to Rs. 50,000 on flight/hotel booking cancellation, twice per year
- Buy 1 and get up to Rs. 500 off on 2nd movie ticket on BookMyShow, twice per month
- 7,500 Reward Points on Rs. 8 lakh annual spends and 15,000 Reward Points on Rs. 15 lakh annual spends
- Up to 2 golf rounds per month, 1st on Rs. 20,000 monthly spends and 2nd on Rs. 40,000 monthly spends
Axis Bank Burgundy Private Credit Card
Joining fee: ₹50000
Annual/Renewal Fee: ₹50000
Unlimited domestic & international airport lounge access
Complimentary EazyDiner Prime, Club Marriott, Accor Plus and Taj Epicure memberships
Product Details
- Free EazyDiner Prime Membership for savings up to 25% at fine dining restaurants
- 50 complimentray golf rounds every year
- Free ticket for every movie/non-movie ticket bought through BookMyShow, applicable 5 times for movies and 5 times for non-movie events
- Complimentary concierge service for 8 airport visits
- Complimentary Club Marriott, Accor Plus, and Taj Epicure memberships
- Zero forex markup fee
AU Zenith+ Credit Card
Joining fee: ₹4999
Annual/Renewal Fee: ₹4999
2X reward points on travel, dining and international spends
16 complimentary international and domestic lounge access every year
Product Details
- 1 reward point for every Rs. 100 on retail spends
- 1,000 reward points on Rs. 75,000 monthly retail spends & Taj Epicure membership on Rs. 12 Lakh annual retail spends
- 16 complimentary international lounge visits in a year using Priority Pass & 16 complimentary domestic airport lounge access every year
- 16 complimentary B1G1 movie/event tickets from BookMyShow in a year
- International travel benefits with a low forex markup fee of 0.99% and 4 end-to-end VIP airport check-in services per year
- Low forex markup fee of 0.99%
YES BANK Marquee Credit Card
Joining fee: ₹9999
Annual/Renewal Fee: ₹4999
36 YES Rewardz Points per Rs. 200 spent online & 18 on offline spends
Up to 24 domestic & unlimited international airport lounge visits per year
Product Details
- 1% forex mark-up fee
- Up to 12 complimentary golf lessons in a year & 4 green fee waivers at select golf courses in India
- 60,000 and 20,000 YES Rewardz Points on joining and renewal fee payments respectively
- B1G1 offer with up to Rs. 800 off per BookMyShow movie ticket with max. 3 free tickets per month
- Min. 15% off on dining via Dining Fiesta program
IDFC FIRST Wealth Credit Card
Joining fee: ₹0
Annual/Renewal Fee: ₹0
Up to 10x rewards on every spend
Up to 8 international & 8 domestic airport lounge & spa access in a year
Product Details
- 3x rewards on monthly spends of up to Rs. 20,000 and 10x rewards on spends after this spend threshold
- 1 reward point per Rs. 150 spent on insurance and utility; low forex mark-up fee of 1.5%
- Buy 1 get 1 offer with up to Rs. 250 off twice a month on movie tickets on District by Zomato app
- Complimentary golf round per Rs. 20,000 monthly spends, up to 2 rounds/month
- 5% cashback on 1st EMI transaction and Rs. 500 gift voucher as welcome benefit
- Low forex mark-up of 1.5%
SBI Card ELITE
Joining fee: ₹4999
Annual/Renewal Fee: ₹4999
5X reward points on dining, grocery and departmental store spends
Complimentary Priority Pass membership
Product Details
- 2 reward points per Rs. 100 spent on other categories
- Up to 50,000 bonus reward points as milestone benefits
- 6 complimentary international lounge access in a year; 1.99% forex mark-up fee
- Up to 8 complimentary domestic lounge access per year, 2 per quarter
- Free movie tickets worth Rs. 6,000 in a year
- Low forex mark-up fee of 1.99%
HDFC Infinia Credit Card
Joining fee: ₹12500
Annual/Renewal Fee: ₹12500
Unlimited airport lounge access for primary and add-on members
10x reward points on travel and shopping spends on Smartbuy
Product Details
- 1 RP = 1 Air Mile or Rs. 1 for travel bookings, Apple products and Tanishq vouchers purchased via SmartBuy
- Invite-only card with Club Marriott membership and 12,500 reward points on card activation & renewal
- 5 reward points on every Rs. 150 spent, including spends on insurance, utilities and education
- Access to unlimited golf games and lessons across premium golf courses worldwide
- Book 3 nights stay at participating ITC hotels and pay for 2 with 1+1 complimentary weekend buffet
- Low forex mark-up fee of 2%
ICICI Emeralde Private Metal Credit Card
Joining fee: ₹12499
Annual/Renewal Fee: ₹12499
Taj Epicure & EazyDiner Prime memberships
Unlimited airport lounge visits
Product Details
- Rs. 3,000 EaseMyTrip vouchers on reaching each annual spending milestone of Rs. 4 Lakh and Rs. 8 Lakh
- Unlimited golf lessons or rounds every month on creating a Golftripz account
- EazyDiner membership, up to 50% off on dining in India & Dubai; 2,000 EazyPoints on joining
- Buy 1 ticket and get up to Rs. 750 off on the 2nd ticket on BookMyShow bookings, twice a month
- 1% fuel surcharge waiver of up to Rs. 1,000 per month on fuel transactions below Rs. 4,000
- Low forex markup fee of 2%
HDFC Regalia Credit Card
Joining fee: ₹2500
Annual/Renewal Fee: ₹2500
4 reward points per Rs. 150 spent on all retail spends
Up to 15,000 bonus reward points as milestone benefit
Product Details
- Low forex markup fee of 2%
- 10,000 rewards on Rs. 5 lakh annual spends & 5,000 rewards on Rs. 8 lakh annual spends
- Up to 20% off on dining via Swiggy Dineout
- Insurance cover for air accident death, lost card liability & emergency overseas hospitalisation
- 1% fuel surcharge waiver up to Rs. 500 per month for fuel spends of Rs. 400 to Rs. 5,000
Axis Magnus Credit Card
Joining fee: ₹12500
Annual/Renewal Fee: ₹12500
Unlimited international & domestic lounge visits with 4 additional guest visits
Up to 60 EDGE reward points per Rs. 200
Product Details
- Low forex mark-up fee of 2%
- Conversion of rewards into Air Miles or Hotel Loyalty points (5:2)
- Luxe gift card/ The Postcard Hotels/ Yatra voucher worth Rs. 12,500 on making the first transaction within 30 days from card issuance
Other Charges applicable to Foreign Transactions
You may incur the following credit card charges when conducting international transactions. Note that these charges are not necessarily applicable; they are subject to the situations as mentioned below.
Tax – Goods & Service Tax (GST) will be applicable on all the fees and charges that your international transactions incur. It is currently at 18%.
Cash Withdrawal Fee – Cash withdrawals done overseas like any domestic withdrawals will incur this fee. The minimum amount can range from Rs. 100 to Rs. 300 and maybe more.
Finance Charges – If you withdraw money or fail to clear your dues by the due date, then finance charges will be applied. The rate can be anywhere between 23% and 42%, may vary across card type and issuers.
Suggested Read: Forex Cards vs Credit Cards – Which is Better for International Travel?
FAQs
Do all monetary instruments charge a mark-up fee on overseas transactions?
No, cash transactions, traveller’s cheques, Forex cards and certain credit cards do not charge a mark-up fee.
Which is better Cash, credit card or travellers’ cheque?
Amongst the three, a credit card is the best monetary instrument for international travel. This is especially true if the card charges 0% currency conversion fee. They also keep your finances secure. Meaning you can cancel/dispute a transaction later on. This facility is not provided by the other two means. Also, cash & travellers’ cheque can be easily misplaced or stolen. Though, you get a small window of time to cancel travellers’ cheques. Travellers’ cheques also require that you pay a commission fee to get them and use them. They are also prepaid.
How can I find out how much am I charged on foreign transaction fee?
At the time of credit card application, you were handed a Most Important Terms & Conditions handbook. You can find the rate under Foreign Currency Transactions fee. You may also contact the credit card provider to know the foreign transaction fee.
Will Finance charges be applicable if I do not pay the foreign transaction amount?
If you fail to pay your whole bill regardless of its contents by the due date then finance charges will be applied.
Is there a credit limit on international spends?
Credit card providers don’t usually set a separate international spend limit. However, some banks allow users to set an international spend limit. You also have the option to activate or deactivate international spends.
What is a foreign transaction fee?
A foreign transaction fee, also known as a forex markup fee, is charged by your bank or card issuer when you make a payment in a foreign currency or through an international merchant.
How to avoid foreign transaction fees?
You can avoid foreign transaction fees by using credit card that offer zero forex markup or no foreign transaction charges. Always choose to pay in the local currency instead of INR to prevent extra costs due to dynamic currency conversion.
Can I avoid foreign transaction fees by paying in INR?
Paying in INR abroad usually does not help you avoid foreign transaction fees. In fact, merchants often apply dynamic currency conversion (DCC), which converts the amount to INR at a poor exchange rate and may include extra markups. Therefore, you may end up paying more even though the transaction is in INR.
Do foreign transaction fees apply to online purchases from international websites?
Yes, foreign transaction fees can apply even to online purchases if the merchant is based overseas or charges in a foreign currency. Even if you are shopping from India, your bank may treat the payment as an international transaction and levy the applicable forex markup fee.
Which credit cards in India do not charge foreign transaction fees?
Some of the popular options include Federal Scapia, Ixigo AU, RBL Bank World Safari, and IDFC FIRST Mayura Credit Card. These cards are ideal for frequent travellers who wish to save on international spends.
Is it better to use a credit card or a forex card abroad?
Both options have their benefits. A credit card with no foreign transaction fees is convenient and offers better fraud protection, while a forex card lets you load foreign currency in advance at locked-in exchange rates. If your credit card offers zero forex markup, it can be as cost-effective as a forex card, with added convenience and security.
