Going Abroad? Know your Conversion Charges

Are you planning to have a vacation in Bangkok? Wondering how to carry cash? Well, cash isn’t always advisable to carry around. Aside from that, credit or debit cards are expensive to use because you’d get charged for conversion fees; note that the exchange rate is based on the day the charge slip will reach the bank. Thus, if rupee weakens during that time, you would have to pay more. The best option for you to avoid huge fees is to get a pre-paid Forex card because it allows you to secure the exchange rate. However, if you use it in a currency that is different from what you’ve loaded, then you are subject to conversion fees.

The One Currency Card

The One Currency Card was recently launched by Thomas Cook India in collaboration with MasterCard Worldwide. It is a pre-paid travel card with no currency conversion fees. The card is pegged to the dollar and there is no conversion fee if you use it in any currency, aside from ATM withdrawals where you’ll be charged with $4 each transaction.

According to the chief operating officer (foreign exchange) and head (visas) of the Thomas Cook, India, Mr. Mahesh Iyer, “As long as customers use it to swipe at point-of-sales terminals, there is no conversion charge, irrespective of which country they use it in.”

Take for example, if you’ve loaded $200 on the card and use it while traveling to Dubai. If the currency conversion rate of 3.67 dirhams to dollar, the value on the card would be 734 dirhams without conversion fees. But if conversion fees are applied, the value would range from 700 to 710 dirhams.

On pre-paid Forex cards, the conversion charges range between three and four per cent. While in case of debit or credit cards, it is 4.5-5 per cent. In case of cash, banks typically charge 1.5-2 per cent for conversion,” Iyer added.

Note that the currency exchange rates that are offered by banks and money changers change depending on the charges.

Authorized Dealers

In case there are authorized dealers, the rates would vary according to whether you want to purchase cash, pre-paid cards, or travellers’ cheques. You can get better rates with travel card compared to cash. However, the rate varies depending on whether you’re an individual or corporate traveller.

Adhil Shetty, the CEO and co-founder of BankBazaar.com, said, “Every institution sets its own prevailing rate based on what premium they want to charge. So, travellers must check two or three outlets before buying. While all rates are broadly based on RBI’s reference rate, they need not equal to the RBI rate.”

Multiple Currency Cards

Although multi-currency cards may address the problem to some extent, you need to determine which currencies are loaded to it. More often than not, banks would provide 8 to 10 of the most popular currencies, but they may not have the currencies that you need.

Vikas mangla, the executive and vice president and ehad of emerging corporate group at Induslnd Bank, charges for both single and multi-currency forex cards are more or less the same.

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