How to Use a Credit Card Abroad Without Paying Extra Charges

Before learning how to avoid extra charges, it's important to understand the different fees associated with international credit card usage.

Using your credit card wisely overseas can help you avoid unnecessary fees and reduce your overall travel expenses. Here is how you can save on international transactions:

1. Choose a Credit Card with Zero Forex Markup Fee

One of the easiest ways to save on international transactions is by using a zero forex markup credit card. Most credit cards charge a forex markup fee of 3.5% on every foreign currency transaction. Since GST is also levied on this fee, the total cost increases further.

Example:

Suppose you spend Rs. 1 Lakh abroad using a card with a 3.5% forex markup fee:

• Purchase Amount: 1,00,000
• Forex Markup Fee (3.5%): 3,500
• GST (18% on Rs. 3,500): 630
• Total Extra Charges: 4,130

A zero forex markup credit card eliminates this fee, helping you save on every international purchase.

2. Always Pay in the Local Currency

Whenever you make a payment abroad, the merchant's payment terminal may ask whether you want to pay in Indian Rupees (INR) or the local currency. Always choose the local currency. Selecting INR triggers Dynamic Currency Conversion (DCC), where the merchant converts the transaction amount using their own exchange rate. By choosing the local currency, your payment is converted using the card network's exchange rate, which is typically more competitive and helps you reduce your overall cost.

3. Avoid Withdrawing Cash Using Your Credit Card

Although most credit cards allow international cash withdrawals, this is usually the costliest way to access money.

A cash withdrawal abroad may attract:

• Cash advance fee
• ATM operator fee
• Forex markup fee (if applicable)
• Interest charges from the transaction date (with no interest-free period)

Instead of using your credit card at ATMs, carry some local currency or use an international debit card or forex card if you need cash.

5. Choose a Card with Travel Benefits

Several travel credit cards not only help reduce international transaction costs but also reward you for overseas spends. Depending on the card, you may earn reward points (e.g., HDFC Infinia Credit Card) or air miles (e.g., Axis Atlas Credit Card). Additionally, many travel cards offer benefits such as complimentary airport lounge access, travel insurance, lost baggage cover, flight delay insurance, and more. If you travel abroad frequently, a travel credit card can help you save more through rewards and other travel benefits.

6. Carry a Backup Payment Option

Even if you primarily rely on your credit card, it's advisable to carry an alternative payment option. This could be another credit card (preferably on a different card network), an international debit card, a forex card, or a small amount of local currency. A backup payment option can be useful if your primary card is lost, blocked, or not accepted by a merchant.

Using your credit card abroad doesn't have to be expensive. Most additional costs are avoidable if you understand how international transactions work and use the right payment practices.

To reduce international transaction costs:

• Choose a zero forex markup credit card
• Always pay in the local currency
• Avoid Dynamic Currency Conversion (DCC)
• Avoid using your credit card for cash withdrawals
• Pay your credit card bill in full and on time
• Carry a backup payment option for emergencies