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How Your Credit Card Gets Charged Overseas

One of the most important points of consideration when travelling abroad is deciding the mode of spending for your expenses. You can either go for the conventional mode of exchanging money for foreign currency or you can simply opt for the easier mode of plastic money in the form of a credit card.

Banks offer international credit cards which can be used for making transactions abroad which is obviously convenient but international transactions attract certain charges and are subject to specific terms and conditions of the card issuing banks.

That is why it is always smart to adopt certain good practices: -

Inform your credit card issuing bank about your travel plans and tentative duration of stay.

Like us, banks are also very concerned about credit card security. So if there is no prior communication from your end, the banks might block your credit card purely for security reasons.

Be aware of the exchange rates for the country you are traveling to.

Your credit card’s limit in rupees changes (increase/decrease) according to the country you are travelling to. For instance, if you are travelling to a European country like Germany, the exchange rate of rupee against a Euro (say Rs. 82.89 ) exponentially reduces your credit limit.

Be informed about transaction charges.

Based on whether your card is a Visa or MasterCard, there are charges in the range of 1-2% for foreign currency conversion. And if you make a transaction from your card, the issuing bank can charge between 2-4% of the transaction amount as transaction charge.

Stick to one credit card.

If you have multiple international credit cards, then use the card with the highest credit limit to pay for all the expenses. That way, the transaction charges will be consistent (rather than veering from card to card issued by different banks) and easier to manage.

Retain all your transaction slips.

Although getting a credit card statement does the job, having your transaction slips allows you to cross-check all the expenses you have made.

Avoid withdrawing cash from your credit card.

Every credit card has a credit limit and a cash limit. You should withdraw from the cash limit only in case of dire emergencies because the charges on cash withdrawals are high (likely between 1-4%) and get applied to each withdrawal you make. Instead of such cash withdrawals, carry some cash.

Prefer a travel currency card

Now these good practices will help you to make international transactions on your credit card in a planned manner so that you do not end up incurring high credit card bills and spend as per your repayment capability.

However, a more convenient and smart way of having foreign exchange is to go for a travel currency card. A travel currency card is a prepaid forex card that allows you carry a significant amount in the form of plastic money, is accepted at over 14 million merchants around the world and gives you 24 hours cash access to a lot of ATMs.

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