Credit Card Charges Abroad:Forex Fees & Cash Withdrawal Cost

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The Real Cost of Using Credit Cards Abroad in 2026

Traveling overseas is now more common than ever for work, study, or leisure. Specifically, many travelers rely on credit cards because they are easy to use and safe. However, hidden costs often surprise users when their final bill arrives. Therefore, you must understand how background fees can quietly drain your travel budget.

Foreign Currency Mark-ups

Most Indian credit cards charge a fee for every purchase made in a different currency. Usually, this mark-up ranges from 2% to 3.5% plus GST. While it seems small, these costs add up fast over a long trip. Still, some cards like the Federal Bank Scapia or IDFC First Wow offer zero forex mark-ups. Currently, these specialized cards help frequent flyers save thousands on shopping and dining.

The Trap of Dynamic Currency Conversion

At many stores, the merchant may offer to charge you in Indian Rupees (INR) instead of the local currency. Since it feels convenient to see the price in your home currency, many travelers say yes. Actually, this process—called Dynamic Currency Conversion (DCC)—uses a poor exchange rate. Usually, the merchant adds their own margin, which can be much higher than your bank’s rate. Therefore, experts suggest you always choose to pay in the local currency to save money.

High Costs of Cash Withdrawals

Withdrawing cash with a credit card is the most expensive mistake you can make abroad. First, banks charge a flat withdrawal fee for every transaction. Then, they apply high interest rates that start from the very first day. Unlike regular spends, cash advances have no interest-free period. For example, a Rs 20,000 withdrawal can quickly grow to Rs 21,300 in just one month. In fact, travelers should use debit or prepaid forex cards for cash needs instead.

Impact of TCS and Exchange Rates

Meanwhile, the Budget 2026 has brought some relief for travelers. Specifically, the government reduced Tax Collected at Source (TCS) for medical and education travel to 2%. Now, this change helps your cash flow by taking less money upfront. However, it does not remove the bank’s own mark-up or conversion fees. Therefore, you should still watch the exchange rate timing, as rates often shift between the day you shop and the day the bank settles the bill.

Data Density: The 2026 Travel Card Benchmarks

• 2% – 3.5%: The standard forex mark-up on most Indian credit cards.

• 18%: The GST rate applied to all credit card fees and mark-ups.

• Zero: The mark-up fee on specialized travel cards like AU Ixigo or IDFC Wow.

• 2%: The new TCS rate for medical and education remittances under Budget 2026.

• 45%: The typical annual interest rate for credit card cash withdrawals abroad.

• April 1, 2026: The date when the new, lower TCS rates officially start.

What’s Next First, you should check your current card’s “Schedule of Charges” for international fees. Then, consider applying for a zero-forex card at least two weeks before your flight. Since these cards often require a quick KYC check, starting early ensures your travel budget stays protected, officials said.

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