Trader logo

Credit Card Vs Forex Card: What’s The Difference?

This article gives a brief on what are the key differences between a Forex card and a Credit card

By Kirti BhargavPublished 2 years ago 4 min read
Like

Credit cards have helped people to get more out of their daily usual transactions and also it has raised the standard of living of the cardholders. Most people use credit cards for the privileges it offers and if used responsibly it may help you to improve your credit score as well. Many credit cards offer ample benefits in travel where you can enjoy airport lounge access, hotel stays, dining benefits, and much more. However, one thing that everyone misses out on is the foreign exchange rate. When traveling abroad, you have to carry foreign exchange to pay for your expenses. With credit cards, you may get the option to do international transactions, but the conversion rates and finance charges make the amount so big. Though few credit cards offer lower markup, the maintenance cost of those cards is too big. This is where Forex cards come into the picture. Forex cards are the most popular way for travellers. It is accepted all over the world and you can also withdraw foreign cash with it. So, what’s the difference between the two, let’s understand in detail.

Meaning: A credit card is a type of line of credit that can be used for every transaction. With credit cards, you earn reward points or cash back for every transaction you do with the card. Also, you also enjoy privileges in travel, hotels, lifestyle, dining, fuel, and much more with a credit card. On the other side, a forex card is a prepaid card that is loaded with a foreign currency. You can load more than one currency on this card and can withdraw the same in foreign countries, use it for transactions, and much more. These cards can be reloaded as per your requirements.

Foreign currency markup: Whenever you swipe a credit card for a foreign transaction, a foreign currency markup fee is applicable over and above the transaction amount. This fee may range from 1.5% to 3.5%. However, if you use a forex card for the same transaction you do not pay any markup fee if the transaction happens with the same currency that is loaded on the card. If the transaction is in some other currency, then you do pay the markup fee of up to 3.5%.

Protection from fluctuations: Every currency fluctuates every day, every minute. With the forex cards, you need not worry about these fluctuations as the rate of a currency is fixed when you store the currency in the card and it will remain as it is. But with credit cards, the rate of the currency will depend upon the rate at the time of the transaction.

Finance Charges: If you don’t settle your credit card bill on time, then you face heavy finance charges that can put you in a debt trap. However, with forex cards, you do not face any charges as the card is a prepaid card.

ATM withdrawal charges: If you use your credit card to withdraw cash through ATM in a foreign ATM, then you have to face tons of charges like cash advance fees, finance charges, and foreign currency markup. But with a forex card, you only pay the fixed lower withdrawal fee.

Privileges: With a forex card, you can only pay for your transactions that are in foreign currency in a cost-effective manner, you do not get any extra benefits. But with the credit card, you get lots of benefits like reward points, airport lounge access, dining benefits, insurance benefits, and much more.

Issuance Cost: The forex cards are prepaid cards and they do not have major issuance cost. In India, the cost of these cards can be within a range of Rs. 100 to Rs. 500. Also, this cost is only one time, you do not have to pay every year. But for credit cards, the issuance cost may start from Rs. 400 and go up to Rs. 5,000. Also, with credit cards, you have to pay Annual charges as well.

So, now you must have got an idea about the difference between the forex cards and the credit cards. Both the cards have great features and offer benefits in their own way. However, the forex cards may seem the right choice when travelling abroad but remember they do not offer much privileges like the credit card. Make a choice keeping in mind your requirements.

Additional Reading: How To Make The Most Of Rewards Credit Cards

personal finance
Like

About the Creator

Kirti Bhargav

Financial Content Writer at Cardinsider.com

Reader insights

Be the first to share your insights about this piece.

How does it work?

Add your insights

Comments

There are no comments for this story

Be the first to respond and start the conversation.

Sign in to comment

    Find us on social media

    Miscellaneous links

    • Explore
    • Contact
    • Privacy Policy
    • Terms of Use
    • Support

    © 2024 Creatd, Inc. All Rights Reserved.