Money abroad is one of the few parts of travel where a couple of hours of preparation reliably saves a meaningful amount. It is also an area full of confident advice that is either out of date or quietly selling something.
Rules, tax rates and card terms change, often at budget time. Treat what follows as the mechanics of the decision, and confirm the current rates and thresholds with your bank and on the official sources before you travel.
The three costs nobody adds up
Every option has some combination of:
- The exchange rate margin. The gap between the interbank rate and the rate you are given. This is the big one and it is usually invisible.
- A transaction fee. A percentage or flat charge per use, often called a foreign transaction or cross-currency fee.
- Tax collected at source. Under the Liberalised Remittance Scheme, forex purchases above a threshold attract TCS. The rate and threshold have changed several times and differ for travel packages versus plain currency purchase. Crucially, TCS is not a cost: it is credited against your income tax and can be claimed. It is a cash-flow effect, not a loss.
Most people optimise the fee they can see and ignore the margin they cannot.
The realistic options
Cash. Best rates are usually from authorised money changers rather than banks or airport counters. Airport currency counters are consistently the worst rate you will be offered anywhere; treat them as an emergency only.
Carry a modest amount for arrival: transport, a meal, a SIM, tips. Not more. Cash is the one option with no recourse if it is lost.
Forex cards. A prepaid card loaded in the destination currency. The advantage is that you lock the rate at load time and there is no cross-currency conversion when you spend. The disadvantages are load and reload fees, ATM withdrawal fees, inactivity charges on some products, and a residual balance that costs you to convert back.
These suit a single-currency trip of reasonable length. They suit a multi-country trip much less well.
Indian credit and debit cards. Convenient and increasingly competitive, but the cross-currency markup varies a lot between issuers and a few charge nothing. Check your specific card’s markup before assuming.
Important: international usage may be disabled by default and needs enabling in the app. Do this before you fly, not at a counter abroad.
UPI abroad. Accepted in a growing number of countries through local schemes, notably in parts of Asia and the Gulf. Worth checking for your destination because where it works it is often the cheapest option available. It is not yet a substitute for having a card.
The single biggest avoidable cost
Dynamic currency conversion. At a foreign terminal or ATM you will be asked whether to be charged in rupees or the local currency.
Always choose the local currency. Choosing rupees hands the conversion to the merchant’s payment processor, which applies its own margin on top of whatever your card charges. The rate offered is reliably worse, sometimes by several percent, and the screen will present it as a convenience.
This one habit saves more than any amount of shopping around for a card.
A practical split
For most trips, a sensible structure is:
- A small amount of cash for the first day.
- One primary card with a low or zero cross-currency markup for everyday spending.
- A second card from a different network, kept separately, as a backup. Card blocks abroad are common and having only one card is the most avoidable disaster in travel finance.
- A forex card only if you are in one currency for a longer stay.
ATMs abroad
Withdraw larger amounts less often; most fees are per transaction. Use bank-operated ATMs rather than standalone machines in tourist areas, which frequently carry their own surcharges. And decline the conversion offer, as above.
Before you fly
- Enable international usage on every card you are carrying.
- Check and raise daily limits if needed.
- Note your bank’s international helpline, and save it offline.
- Tell the bank your travel dates if they offer that; it reduces fraud blocks.
- Check your specific card’s cross-currency markup rather than assuming.
- Keep a photo of your cards and passport in secure offline storage.
On the way home
Convert leftover foreign cash before returning if the amount is meaningful; rates in India for small foreign denominations are poor and coins are usually worthless. Unload forex card balances rather than leaving them to accrue inactivity fees, and keep your exchange receipts, because you will want them at tax time for the TCS credit.