Forex Card vs. Credit Card: Which is the Smarter Choice for International Travel?

International travel can be exciting, but managing money during a trip needs careful thought. For individuals from India planning to travel abroad, the decision between a foreign exchange card and a credit card is crucial. A forex card is a prepaid card loaded with foreign money. A credit card lets you borrow money and pay later. Both help with payments overseas, but they work in different ways. This article looks at the forex card vs the credit card to help you pick the best one for your needs. We will cover costs, safety, ease of use, and provide examples of good options, including credit cards with the lowest foreign exchange (forex) markup. By the end, you will know which suits your travel style.

What is a forex card?

A forex card is a type of prepaid card for use outside India. You load it with foreign currencies like US dollars or euros. Many banks and fintech companies issue these cards. You can load money through an app or online banking. The card locks in the exchange rate at the time of loading.

These cards are safe because only the loaded amount can be spent. If lost, you can block it quickly. They often have fees for loading, unloading, ATM withdrawals, and inactivity. For example, you can withdraw cash from ATMs with a nominal charge.

What is a credit card?

Credit cards are of 2 types: secured (backed by collateral) and unsecured, which lets you spend money you do not have yet, up to a set limit. You pay back later, often with interest if not on time. For travel, credit cards are accepted almost everywhere, like hotels and shops. They also offer rewards such as points or cashback.

However, just like prepaid forex cards, credit cards charge a forex markup fee on foreign spending, usually 3% to 5%. This incurs an additional cost when converting rupees to foreign currency. Some cards have lower fees, which we will discuss later. Credit cards are helpful for big buys or emergencies, as you do not need to load money first. However, if you do not pay the full bill, interest can accumulate quickly.

Most hotels and rental car agencies abroad expect a credit card on file to block a deposit.

Advantages and disadvantages

Forex cards have clear benefits. They help you stick to a budget since you cannot spend more than you have. Fees are low, and they are safer for travel because there is no debt risk. A downside is that you must plan ahead to load money. If you run out abroad, topping up requires internet, which may not always be readily available.

Credit cards are flexible. You can use them right away without loading funds. Rewards like travel points can save money over time. For example, some give free airport lounge entry. But the forex markup fee is a big drawback. On a ₹50,000 trip, a 3.5% fee adds ₹1,750 extra. Additionally, failing to pay can result in high interest rates.

When to choose each type?

Your choice depends on your trip. For a budget backpacking trip to Southeast Asia, use a forex card. It keeps costs low and helps track spending. A family holiday to Europe? A forex card still works well for daily use, but consider adding a credit card for higher spending limits.

For business travel, pick a credit card with the lowest forex markup. These save on fees while giving rewards. If you travel often, a mix of both is best: forex for most expenses, credit for extras.

Are Niyo cards a better option?

For many international travellers, students, and professionals, Niyo cards offer compelling advantages. They bring you the best of forex card & credit card benefits! Here’s why they can be a better choice, along with a few caveats to keep in mind.

• Zero forex markup: Transactions abroad (in over 130 currencies, across 180 countries) are processed at the standard VISA exchange rate with no additional foreign-exchange markup, potentially saving up to 3-5% per transaction compared to traditional cards. Only the transaction amount gets converted; the rest of the funds continue to earn high interest!

• High-interest savings account linkage: The card is tied to a digital savings account earning interest, so your idle funds abroad aren’t just sitting; they continue to earn.

• Global acceptance and app control: The card supports worldwide payments, featuring functions such as card lock/unlock, real-time transaction notifications, and a currency converter within the app to check live VISA exchange rates.

• Travel perks: Enjoy lounge access (outside India, if you meet the spend thresholds), free international ATM withdrawal each quarter, and other travel-related benefits.

Final thoughts

When it comes to choosing between a forex card vs credit card, the right option depends on your travel style. Forex cards are ideal for planned trips where you prefer to stick to a set budget. However, if you want greater flexibility, convenience, and zero forex markup, the Niyo international debit & credit card combination is a clear winner.

With real-time VISA exchange rates, zero hidden fees, global acceptance, and complete app-based control, Niyo lets you spend abroad just like you do at home, easily, securely, and without extra charges.

So, whether you’re a student heading overseas, a frequent traveller, or someone who shops on international websites, Niyo helps you save more every time you spend. Better yet, unlike prepaid forex cards, you can continue to use your Niyo cards in India too!