Prepaid cards are used for making payments while you are travelling abroad. These are pre-loaded and enable you to access money in the required regional currency. You can also top it up depending on your requirement. The card allows you to withdraw cash in foreign currency, check your balance and shop. Banks such as ICICI Bank, HDFC Bank, State Bank of India, Standard Chartered and Axis Bank offer prepaid forex cards.
How do you apply and what is the limit?
You need to submit FormA2 and any other required forex document (as mandated under Foreign Exchange Management Act regulations), proof of passport and required funds. Once the funds get cleared or are paid to bank, the card gets activated. For leisure trips, you can load the card for a maximum of $10,000 (Rs 4.5 lakh) and $25,000 (Rs 11.25 lakh) for business trips. Banks charge between Rs 100-300 per card.
How are these better than others?
Debit and credit cards involve a service charge of three per cent for each usage. Withdrawals at ATMs would attract an extra flat fee of Rs 300. You would be billed at the exchange rate prevailing on the date of transaction and charged a currency conversion rate accordingly. Besides, any delay in bill payments will attract a penalty of 2.95 per cent a month. Travellers’ cheques are accepted at limited outlets and customers are charged an encashment fee of three-six per cent. Comparatively, forex cards are cost-effective, since the exchange rates get locked in on the day of transaction. You can avoid currency conversions, as the cards are available in major currencies. Withdrawing cash at ATMs abroad will attract a flat fee ($2/ euro 2/ £1).
Do exchange rates impact usage?
Yes. While using forex cards, be sure of the exchange rate you are spending at. You would be saving on expenses if the foreign currency’s value increases as against the rupee and vice versa.
What if I need to re-load the card?
You cannot top-up the forex card abroad, even if your bank has a branch there. You will need to contact the centre that issued the card. This can be a problem when there is no one back home, as he/she will again need to fill forms and make necessary payments. Intimating the bank in advance and leaving necessary documentation might be an option. Unused balance in your card can be encashed on return.
What happens if the card gets lost?
Intimate the centre that issued the card. Inform them about your location after 48 hours, since this is the time the bank will take to courier a replacement. In case of exigencies, it may send cash through money transfer facility, but costs will have to be borne.
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