Foreign Transaction Fee On Credit Cards Explained

No, cash transactions, traveller’s cheques, Forex cards and certain credit cards do not charge a mark-up fee.

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.

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.

If you fail to pay your whole bill regardless of its contents by the due date then finance charges will be applied.

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.

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.

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.

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.

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.

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.