Money Saver India
Charges on forex transactions

Charges on forex transactions

Do you regularly make transactions in foreign currencies with your credit card? While there’s little you can do about it, remember that you’re paying around 5-6% in charges each time you do so.

There’s plenty of opportunity now to transact in foreign currency. You can buy digital apps, games and books and order clothes and electronics from foreign stores any day you please. Now, the transaction is very convenient with your credit card. It’s as simple as buying from India. However, what you may not realise is that you’re paying transaction charges, which work out to around 5-6%, each time you swipe your card.

Foreign currency mark-up:
The first reason for the higher charge is the bank forex rate. This rate is usually higher at a bank than at a local forex dealer. Therefore, you’re paying a marginally higher price to begin with. If the local dealer offers you a rate of say Rs60 to a dollar, the bank could give you a rate of Rs61.5. In addition to this, your card provider charges you a mark-up for just allowing you to transact in other currencies. This fee is 3.5% of the transaction amount. So if you pay a bill of Rs10,000 (in whichever currency), you’re paying Rs350 only to make the transaction possible. In addition to this, you could end up paying a conversion rate if the merchant doesn’t post the transaction to Visa or MasterCard immediately.

What can you do?
Not much. If you need to make a transaction in a foreign currency, why can you do? If you’re comparing prices with items available in India, be sure to factor in the additional 5-6%. Also, if others are using your credit card to perform transactions, you may not want to end up paying this amount.

Lastly, if you’re bothered by the 3.5% foreign currency mark-up, here are a few cards that charge less than this percentage:

Bank Card Mark-up fee
ING Vysya All cards 3%
Canara Bank Canara Card 3%
HDFC Bank Regalia 2%
HDFC Bank Diners Club 2%
HDFC Bank Diners Club Premium 2.50%

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