Quick answer
For most trips, use a forex card or a zero-markup credit card for the bulk of your spending, carry 10–30% of your budget in cash, and keep a regular credit card for hotel deposits and emergencies. Regular Indian credit cards cost about 4% extra once GST on the markup is added. Airport cash counters and paying in rupees through dynamic currency conversion cost the most.
Key takeaways
- Regular credit cards: a 2–3.5% markup plus 18% GST on it, so up to about 4.1% on every foreign spend.
- Forex cards: about 1–2.5% built into the loading rate, plus ATM fees of about USD 2–3 a withdrawal.
- Zero-markup credit cards come closest to the interbank rate; check the annual fee and eligibility.
- Always pay in local currency. Dynamic currency conversion adds 3–8%.
- Buy cash in your city a few days ahead; airport counters can cost 5–8% over interbank.
What does each option really cost?
Every way of paying abroad has a margin over the interbank rate, the one you see on a finance app. The question is how big it is, and where it hides.
| Method | Typical cost over interbank | Where it hides |
|---|---|---|
| Cash from a city money changer | 1–3% | In the rate quoted |
| Cash at an airport counter | 5–8% or more | In the rate quoted |
| Forex card | 1–2.5% at loading | Loading rate, ATM fees, cross-currency fees |
| Regular credit card | 2–3.5% plus 18% GST on the markup | A separate line on your statement |
| Zero-markup credit card | Close to the card network's rate | Annual fee, eligibility |
| Debit card | 2–3.5% plus GST, plus ATM fees | Your bank statement |
| Dynamic currency conversion | 3–8% | The "rupee" price on the terminal |
There's also a small GST on buying currency itself: 0.18% of the value for purchases up to ₹1 lakh, with a minimum of ₹45. The full breakdown is in our forex markup entry.
When does a forex card win?
A forex card works best for a trip to one or two currency zones where you know roughly what you'll spend. You lock the rate when you load, so a weaker rupee mid-trip doesn't hurt you, and the card isn't linked to your bank account, so a skimmed card exposes only the balance.
It's a good fit for:
- Europe, the UK, Singapore, Dubai and the US, where cards are accepted almost everywhere
- Students and parents travelling on a fixed budget
- Travellers who don't have a zero-markup credit card
Watch out for cross-currency charges. Spend Swiss francs on a euro-only card and you may pay 2–3.5% extra. Load each currency you'll use, or pick a multi-currency card.
Some hotels, car rental desks and petrol pumps won't accept prepaid cards for security deposits or pre-authorisations, so carry a credit card as well.
When does a credit card win?
A regular Indian credit card is the most convenient option and often the most expensive. With a 3.5% markup and 18% GST on it, every ₹1,00,000 spent abroad costs about ₹4,130 extra. It still has a place:
- Hotel deposits and car hire, where a credit card is often required
- Emergencies, when you need a large amount quickly
- Online bookings in foreign currency, such as a museum slot or a European train ticket
- Disputes, since chargebacks are easier on a credit card
A zero-markup card changes the maths. Several Indian banks and fintech issuers offer credit cards with no foreign currency markup, which brings your cost close to the card network's own rate. If you travel abroad more than once a year, one of these usually pays for itself, even with an annual fee.
Spends abroad on Indian credit cards are not counted under LRS for TCS at the time of review. That's a reporting detail rather than a saving: forex for your own trip attracts no TCS anyway until your remittances cross ₹10 lakh a year.
When does cash win?
Cash still matters in Thailand, Bali, Vietnam, Egypt and Turkey's bazaars, and in smaller towns across Europe and Japan: street food, tuk-tuks, temple donations, tips, markets and family-run guesthouses. Cash is also your backup if a card is blocked.
RBI lets you carry up to USD 3,000 or equivalent in foreign currency notes per trip. Buy it in your city two to five days before you fly, compare quotes in rupees per unit, and ask whether the quote includes GST and service charges. Airport counters are the last resort.
Withdrawing cash abroad with a forex card usually costs about USD 2–3 per withdrawal from your issuer, plus whatever the local ATM charges. Thai ATMs charge foreign cards about THB 220–250 (₹600–675) a time, so take out larger amounts less often.
What about debit cards?
An Indian debit card works abroad once you enable international use in your bank app, but it combines a 2–3.5% markup with ATM fees on both sides, and it exposes your savings account. Treat it as a backup, not your main card.
Worked example: two weeks in Europe
A Mumbai couple spends ₹2,00,000 on the ground in France and Italy, about €1,960 at ₹102.
| Method | Approximate extra cost |
|---|---|
| Zero-markup credit card | ₹600–2,000 |
| Forex card loaded at about 1.5% over interbank | about ₹3,000, plus ATM fees |
| Regular credit card at 3.5% plus GST | about ₹8,260 |
| Paying in rupees through DCC at 6% | ₹12,000 or more |
| All cash bought at the airport at 6% | about ₹12,000 |
The sensible mix for this couple is EUR 300 in cash bought in Mumbai, the rest on a forex card or zero-markup card, and a regular credit card for the hotel deposit and as a backup.
Why should you always pay in local currency?
At a card machine in Rome or an ATM in Bangkok, you'll often be asked whether to pay in rupees. That's dynamic currency conversion: the merchant's payment provider sets the rate, usually 3–8% worse than your card's. Many Indian banks still add their foreign transaction markup on top, because the transaction is processed abroad. Always choose euros, baht or dirhams.
If a waiter brings a card machine already set to INR, ask them to cancel and redo it in local currency. At ATMs, decline the conversion offer; the withdrawal still goes through at your card's rate.
What mix do we usually suggest?
| Trip | Cash share | Main card | Backup |
|---|---|---|---|
| Dubai, Singapore | 10–20% | Forex card or zero-markup card | Credit card |
| Europe, UK, US | 10–20% | Forex card or zero-markup card | Credit card |
| Thailand, Bali, Vietnam | 30–50% | Forex card for ATMs and malls | Credit card |
| Japan | 25–40% | Forex card or zero-markup card | Credit card |
Our foreign exchange desk can quote for cash and forex cards together, so you can compare like for like. For planning amounts, see how much forex to carry.
Frequently asked questions
Is a forex card better than a credit card for international travel?
What is the foreign transaction fee on Indian credit cards?
Can I use a forex card for a hotel security deposit?
Is TCS charged when I load a forex card?
Should I carry cash or withdraw from ATMs abroad?
What happens to the money left on my forex card?
How we checked this page
Last reviewed
Written and fact-checked by the Elitech Travels editorial desk in New Delhi, drawing on our consultants' day-to-day booking work and the official sources below. Rules, fares and fees change — always confirm anything critical with the issuing authority before you travel. Our editorial policy.
