Money Matters: Choosing Your Ideal Travel Companion

Say you are planning a trip to Europe shortly. Depending on the weather and the places you have planned to visit, you might pack everything you need. From the scratch, you might plan everything and successfully end up creating an itinerary. But, you will ultimately need money to take this ahead. So, will you take INR as such? If so, is it advisable to carry such a huge amount? Would you take a credit card along? Or would you ask your European friend? Do you know about Travel cards? Which of these is more convenient in terms of usage? Which will help you save the maximum of your money? Do you know what other fellow travellers do? Are you in the current trend? Do you know what the future is shifting towards? Read through to help yourself during your travel.

Let us learn from the scratch to find your best travel partner.

Travel Card

A travel card / Forex card (that is how it is popularly known among the travellers) is of pre-paid format and pre-loading it with money is mandatory for you to spend later. This works similar to a debit card but allows you to pre – load with home currency and spend in another country by charging a conversion rate. There are 3 types of travel cards – single currency card, multi currency card and sterling prepaid cards. A single currency card allows only one type of currency whereas a multi currency card allows you to load up to 15 different currencies.

How to buy a travel card

There are an array of travel card options.

1. Define your requirement and the country you are travelling to. Accordingly select if you will need a single/multi currency card.
2. Keep the documents ready – original passport, A2 form, PAN card and supporting documents as specified by the bank.
3. Buy the desired amount of money and preload with the desired amount of money.
4. The card is now ready to be used overtime. It is also notable that it can be loaded anytime and anywhere online.

For an extensive list of the best travel cards of 2023, you may refer to the following article that we found very useful.

• Best travel credit cards in India 2023
• The best travel credit cards of 2023

Credit Card and Cash

As we might be aware, Credit Card is that financial tool which provides its holder a predefined credit limit to which the holder will have access for that particular month. This has the purchasing-first and paying-back later option. However, the money should be paid back along with the interest. The credit limit and the interest is specified by the bank from which the card is purchased.

Cash is an important physical commodity that helps you spend immediately without delay in your travel. However it has its own pros and cons and converting them to foreign currency is mandatory before travelling. Let us traverse through each to understand which is better.

Parameters explained

There are key parameters which would effectively bring about Credit card Vs Travel card Vs Cash comparison and would help us gain clarity in choosing the best for our travel.

Currency Conversion Rate

In simple words, currency conversion rate is the rate at which one country’s currency is exchanged for another. For example : 1 USD = 75.50 INR.

1. Credit card: Credit card has a currency conversion rate of 1.5 to 4% generally. But depends on the issuer.
2. Travel card: You could avoid incurring this mark up fee by choosing a multi-currency travel card since it allows you to load up to 15 currencies. however if you have loaded in your home currency, the conversion rate is from 1.5% to 2%.
3. Cash: Cash has a lowest conversion rate of 1 to 1.5%.

In a battle of Credit card Vs Travel Card Vs Cash, carrying cash is advantageous considering the currency conversion rate. Considering prepaid Travel card vs Credit card, Travel cards are advantageous.

Acceptability

Acceptability comes into play when you start getting down into the streets to make your purchase.

1. Credit card: Depending upon the issuer(bank), the transaction may or may not be approved. So, acceptability becomes a big question mark in such cases. And even if it happens, it becomes way more costlier.
2. Travel card: You will need to with-draw from an ATM and your bank would charge you for the foreign transaction. The acceptability becomes a matter of hassle when they are accompanied with OTPs which might consume some time.
3. Cash: The liquidity is super advantageous and the acceptability is universal.

Hence again, among Credit card vs Travel card Vs Cash, it is the cash winning. Taking into account Travel card Vs Credit card, Travel card is more advantageous.

Multi-currency option

When on a multi country vacation, it is important for you to have availability to multi-currency else managing through the funds would become your task at hand in your vacation.

1. Credit card: Since they are INR cards, the currency exchange rate is opaque and are highly erratic. You will have to pay the interest charges, the withdrawal fee and transaction fee which becomes way more expensive. In the end, the option is available but is far more expensive.
2. Travel Card: It has a multi-currency option and you will have to pay a little of transaction cost if you have loaded with your home currency. But, these travel cards actually offer an advantage of loading up to 15 different currencies out of which you can choose to pay the country’s currency in which you are.
3. Cash: It is mandatory to carry a multi-currency with you.

Among Credit card Vs Travel Card Vs Cash, Travel card is the most advantageous. Considering Cash Vs Credit card, Credit card is more advantageous.

Retaining foreign currency

Post vacation, any currency left is surplus. You will have to exchange it to your home currency.

1. Credit card: Credit card becomes the most advantageous since you will be paying only what you spent in your home currency. So, there is no chance of retaining any foreign currency.
2. Travel card: Travel cards offer a validity of these foreign currency for 3 to 5 years. However, you necessarily may not need the same currency unless you plan to travel to the same country shortly. Hence, you will need to convert the currency back to INR.
3. Cash: This mandatorily forces you to convert back to INR.

There is no place for a Cash Vs Travel card and obviously it is the Credit card being advantageous.

Advantages

1. Credit card: Access to the airport lounge, be able to accrue reward points, benefits like cash backs, rewards, convenience, lost- cost loans, accessibility during emergency, fraud protection, easy to block and many more.
2. Travel card: Multi-currency accessibility, lesser risk, locked in exchange rate, comparatively lower ATM withdrawal expenses, cost-effective to buy, acceptability, transparent exchange rates, safe and comes with an insurance cover.
3. Cash: Liquidity, acceptability and being universal. Money is the most ultimate and comes back to money in spite of having such digital transactions.

Disadvantages

1. Credit card: Interest charges, Monthly payments, never ending fee, temptation to overspend, debt, credit score impacts and much more.
2. Travel card: Available in only 15 to 20 foreign currency, time consuming – reloading may take up to 3 days, more exchange rates compared to cash.
3. Cash: Can be stolen and the risk cover is zero.

In the Hashtags

Travel cards are in the current trend as it is highly flexible. It has a high variety of options depending on the customer’s need. The suppleness in the credit card is now becoming available in travel cards too. The reward options, airport benefits, plastic card security and a lot other benefits attracts young travellers comfortably becoming their only go to option.

Coming up next

With technology peeking in almost every field, the future is looking as bright as our phone screens. Moving plastic and banks authorising international payments like these days NFTs and UPIs will be more preferable in the future. More simplicity and more protection stays uncompromising any day.

Credit card Vs Travel card Vs Cash – which is more advantageous? The answer to this question is your requirement and usage. Considering the above explained parameters will quickly help you decide what you will need to carry for your travel.