Are you planning for your next foreign trip? Have you decided on how you’re going to carry your money? And how much money are you going to carry? Should you use cash, credit/debit card, traveller’s check, or forex card? Or should it be a mix of these options?
While travelling abroad, one of the biggest decisions to make is - how you carry the currency that you will use during your trip. With one US dollar reaching more than Rs. 74, foreign trips are going to cost a lot for certain destinations. And it’s only wise to do thorough homework and understand various currency exchange rules and options.
Gaining a good understanding of the foreign exchange rules and options not only saves you a lot of headaches but also gets you more out of your money. So why not spend some time and do a little homework beforehand?
Well, we’ve got you covered. Here’s all you need to know about taking forex abroad or bringing it back from your foreign trip.
Here are a few rules to abide by while travelling abroad:
What forms of forex to buy
You can buy foreign exchange in multiple forms. It can be – cash or currency notes, traveller’s cheques, or pre-paid forex cards in multi-currency.
But with so many options available, what is the best way? Well, the best way is to keep your foreign exchange in a combination of these forms. The most preferred method is to carry cash for smaller expenses, along with prepaid multi-currency cards.
You can use these multi-currency cards at merchant outlets for payment or take out cash at an ATM. Besides, you can activate debit/credit cards for international payments for the period of your overseas travel. However, you should keep it only for emergencies as these cards attract a high transaction fee.
How much forex to purchase
As per the Liberalised Remittance Scheme issued by the Reserve Bank of India(RBI), an Indian resident can buy a maximum of 2,50,000 USD per head or its equivalent in any other currency. This amount is applicable per trip abroad or in multiple trips abroad per financial year (April – March). Out of this, you can take 3,000 USD or equivalent as cash (Currency). Besides, an Indian can carry Indian currency (in cash) up to ₹25,000 per foreign trip. You can carry the remaining amount in a forex card and traveller’s cheques.
How much in advance to buy
While travelling abroad, it’s always better to be prepared in advance. The RBI permits you to buy foreign exchange up to a maximum of 60 days before the date of your travel. You can use this 60-day window judiciously to buy foreign exchange when the rate is favourable.
The documents you will need are – a passport, a copy of your flight tickets, and a valid travel visa. Remember, if for some reason you are unable to travel or use that money within 60 days, you need to surrender it to the authorised dealer within 180 days of your return.
Where to buy
Another big decision is – from where to buy your foreign exchange? Most banks in major cities have designated branches which offer foreign currency, a quick google search or calling your banks' helpline will lead you to such designated branch. Alternatively, you can buy it from an travel agents who are also forex dealer (like SOTC) or even online (through banks and websites of travel agents like SOTC). However each of these channels charges a different margin that may be around 3.5% for dealers, about 2.5% for banks.
Remember, you should never exchange your money at the Airports! Airports always charge higher for any goods or services that you take on their premises. The same is true for foreign exchange as well. You should always keep your foreign exchange ready well in advance.
At Airports, you will end up paying approximately 8-9% higher rates plus service charges and commissions. So, unless you are ready to pay such exorbitant rates, avoid using airports for any foreign exchange.
Using Credit Card Abroad
One can use his/her international credit card abroad to avoid the hassel associated with purchasing forex, however it is important to note that most credit card provider charge commission of 3.5 on international purchases. Additionally, as we all know credit cards are not accepted at all places.
How much to keep after you return
Once you are back from the trip, you are allowed to hold foreign exchange up to USD 2,000, in the form of foreign currency notes or Travelers Cheques for future use. You must surrender any foreign exchange in cash over and above this sum to a bank within 90 days. In case you have Travelers Cheques, you need to surrender within 180 days of return. You may also credit the amount above US$ 2000 to your Resident Foreign Currency (RFC) Domestic Account.
How much to bring while visiting India
If you are visiting India from abroad, there is no limit on how much foreign exchange you can bring here. However, if the foreign currency notes or travellers’ cheques exceed US$ 10,000/- (or its equivalent), you must declare it. Similarly, if the value of the foreign currency you bring in exceeds US$ 5,000/- (or its equivalent) it has to be declared at the Airport. Once you arrive in India, you need to report it to the Customs Authorities in the Currency Declaration Form (CDF).
The bottom line
Having a good understanding of foreign currency options and rules is essential for a hassle-free foreign trip. So, if you are going abroad anytime soon, then make sure that your travel planning is not limited to just clothes and sightseeing, but also includes the foreign currency you should be carrying. Also, the rules and regulations keep changing from time to time. So, make sure to get the updated information.
Start preparing for your next overseas travel now and ensure smooth financial transactions and a worry-free experience abroad!