Mr. Batra and his wife each own a credit card of ICICI and HDFC respectively. Till now they’d been using their cards in India for shopping, utility bill payments and others and have always been minute readers of their card statement and made monthly payments before the due date with not even a single late payment. This summer they went on to their first abroad trip to Switzerland and spent over Rs. 2, 00, 000 in 15 days through their each of their card i.e. a total of Rs. 4, 00, 000 and slighthly higher which mostly included expenses for local sightseeing, dining, shopping, cash advance and others. But this excludes internal flight expenses and hotel booking as they did everything from India.
Upon returning from the wonderful trip, their monthly credit card bill arrived and they wanted to check how much they have spent and on what during their memorable trip. However upon seeing the outstanding payment they were shocked as various charges were included in their card statement which they never heard of. Although these charges were mentioned in the offer document while purchasing the card but then hardly anyone reads the charges, terms & conditions and these most important details are simply ignored.
So what types of charges are levied when Indian credit card is used overseas?
Many people are of belief that credit card issued in India does not carry any additional charges when used abroad for purchases, dining etc. But this is a MYTH. Apart from the normal charges when credit card is used overseas; following charges are also applicable which actually adds upto the profit of the card issuer:
- International card withdrawal fee: This is an additional fee charged when you use Indian credit card for ATM cash withdrawal in foreign country. And this cash advance fee is between 1-2%. Also be aware, the moment you make cash withdrawal abroad the interest rate starts. Check out credit cards with low interest rate and zero joining and annual fee.
- Standard cash withdrawal: This cash advance fee is in addition to the overseas withdrawal fee and is always applied whether you use card within India or abroad.
- Foreign currency conversion: This rate also called as cross-currency mark-up is levied on every transaction you make abroad using your Indian credit card. The normal range is 3-5% and varies for each bank, and the rate is applied on the date of settlement and not on the date of transaction. So for e.g. if you use credit card on 20th June but the settlement is done on 24th June then rate on 24th June will be applied.Here are the mark-up charges for few of India’s banks:
ICICI bank: 3.50%
HDFC bank: 3.50%. And it varies according to the card type. For the cards – regalia, business regalia, jet world, jetprivelege diners club it is 2.0%.
Axis bank: 3.50%
Kotak Mahindra Bank: 2.50%
- Foreign Transaction Fee (FTF): Visa and mastercard is the world’s most widely used and accepted payment network. They act as mediator between the card issuing bank and the merchant from which you have purchased goods/service. So when you use Indian credit card abroad, two parties charge a transaction fee: Visa, mastercard and other payment networks charge 1% and your card issuing bank such as HDFC, Axis bank, SBI and others charge 2%.
So before you plan out your foreign trip make sure you go through each and every charge related to it to avoid or lower the same. Other alternate solutions to the credit cards are pre-paid travel cards and traveller’s cheque which are especially designed for abroad travellers.