One of the biggest challenges of international travel is the additional cost of foreign exchange (forex) markups. Whether you swipe a debit or credit card, you pay an extra 1.5-4% charge on every transaction.
Even purchasing foreign currency in cash incurs a fee, not to mention the inconvenience of carrying large amounts of cash.
When the credit card users' reward rate is higher than the forex mark-up charged by the bank or issuing company, the net reward cancels out the forex fees. However, this benefit can be achieved by credit card users who meticulously plan to extract maximum rewards from cards and recoup the fees paid.
For most travellers, a zero-forex credit card with no joining fee is a straightforward option. These cards eliminate forex fees on international transactions without the need to work hard to recover annual card fees.
Mint has identified three such cards: IDFC Wow, Federal Bank Scapia, and RBL World Safari. All three cards waive forex conversion fees on international payments. IDFC Wow and Scapia are lifetime-free cards.
RBL World Safari offers free membership in the first year but charges ₹3,540 (including 18% GST) annually from the second year. However, recovering this fee is relatively easy through the card's benefits, including free international travel insurance, lounge access, and redeemable gift vouchers.
The card gives free multi-trip travel insurance, which can be used for at least two international travel. The premium of a travel insurance policy for foreign trip can be in the range of ₹1,000-5,000. It also offers two domestic lounge access per quarter and two international lounge access per year.
The card offers a 1.25% reward rate on travel bookings. Besides, the milestone benefit of 10,000 reward points on spending ₹2.5 lakh is of great value. One can easily spend this amount when using the card during foreign travels.
IDFC Wow card is a secured card that requires a fixed deposit from the bank. The credit limit is at least equal to the FD amount. “The big upside of secured cards is that anyone can get them. You don't need a good Cibil or high income to qualify,” said Sumanta Mandal, founder, Technofino, a platform specializing in credit card reviews.
Scapia offers the highest rewards among the three options, with a 4% reward rate on travel bookings made through the Scapia app and 2% on eligible purchases elsewhere.
However, Scapia’s customer service is not good, Mandal warns. “If you are getting a card mainly for international transactions, I would advise against a card that doesn’t have an effective support team as issues in international payments are frequent.”
