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Few months down the line, I may get an opportunity to go to Canada for a conference as well as doing bit of sight-seeing as well. While I do have debit cards from few banks, I was told credit cards are better as foreign exchange fees is a bit less. How much of this is true ? I have both mastercard and visa debit cards. Does it make sense to have a credit card apart from Debit card ? I am looking for which would have less charges for me. The banks I am looking at are State Bank of India, Bank of India and Bank of Baroda, all nationalized Indian banks. I do not know if they matter at all as for international payments, in either case it would either be 'visa' or 'mastercard' mechanism at work.

Another sub-question is in the event the opportunity arises I might be away for more than a month, in such a situation I could also use a joint account with a relative so they can do the payments within time as well. Is this advisable or not ? The Debit and Credit card will be in my name as I would be the first holder in the account.

My primary motivation is to get money from ATM's to use petty money for laundrette, paying off hostel fees, lunch, dinner etc, those kind of services. I suspect it might be cheaper to do things by cash than card as well as no possibility of any creeping fees apart from usual banking fees during ATM transactions.

  • Do you know if your credit cards offer a "no foreign transaction fee"? – Michael Feb 18 '17 at 14:22
  • Not sure what kind of cards are available in India, but for typical US-issued credit cards, withdrawing cash at an ATM incurs a cash advance fee of about 3-4%, in addition to any foreign exchange fee which can be 0-3%. Such cash advances also incur interest, starting immediately, at a high rate (typically 25-30% per year). Debit cards may have some fees, but typically not nearly this high; they are a much better deal. – Nate Eldredge Feb 18 '17 at 16:21
  • The situation is different if you are going to make purchases with the card instead of cash withdrawals. Then you don't have a cash advance fee, and if you normally pay the card off, you have a grace period of about a month during which no interest accumulates. In that case it is just a matter of comparing the foreign exchange fees. – Nate Eldredge Feb 18 '17 at 16:23
  • I realized that perhaps I might not have shared more details, hence shared a bit more. @Michael C. I have yet to research that but did overhear conversations that "there are some cards which don't have foreign transaction fee." I am/was hoping to see who might be familiar with indian banking system. – shirish Feb 18 '17 at 18:23
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    Also, FWIW it depends a lot on your credit card and bank/credit union; look each option up. I had credit cards at 2.75, 2, and 1%, and banks (ATM/Debit card) offering 2% and 1%. Since there's an additional fee with each transaction, I used the ATM card to get a wad of cash, and only used the 1% CC when necessary. – Kevin Feb 18 '17 at 18:33
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Caveat: I have never owned an Indian card but the items below are true for at least three different countries where I have lived in

  1. Each card has an individual set of terms & fees. You can't easily make blanket statements bout fees by card type or issuer.
  2. The terms that you want to check are "foreign transaction fee" "cash advanced fee" "ATM usage fee" "cash interested rate" "grace period". There are LOTs of fees and the bank wants you to pay them all.
  3. Credit cards are typically BAD for cash advances. You pay multiple fees and high interest rate. You often loose your "grace period" and pay extra interest on regular purchases as well. It can also be tricky to pay off, since by the time your payment arrives, new interest has accumulated. The only way to pay it off is to overpay significantly and than get a refund.
  4. Debit cards do not accrue interest since you can only access money that you already have in your account and it's not a loan. However they can incur all kinds of other fees.
  5. It's a good idea to check with your bank if they have a partner bank in Canada. Partner banks often have mutual agreements for fee-waiving. That's what I do: I use by home bank ATM card at ATMs of partner banks in other countries.
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I can't speak for India, but for US travelers abroad, using an ATM card that reimburses transaction fees is usually the most convenient and cheapest way to obtain foreign cash. There are several banks and brokerages that offer these types of ATM cards in the US. The exchange rate is competitive and because the fees are reimbursed it's cheaper and easy than going to a bank or kiosk to exchange currencies. I don't know if you can get accounts/cards like this in India that reimburse ATM fees.

For purchases, using a credit card is fine, too. Some cards charge a foreign transaction fee of ~1%, some don't. The credit card I use most of the time does charge a 1% transaction fee, but I get 2% back in rewards so I still don't mind using it when traveling.

  • In my experience most cards that do charge foreign transaction charge 3%. 1% is pretty rare. See for example valuepenguin.com/credit-card-foreign-transaction-fees – Hilmar Feb 18 '17 at 18:54
  • Both Schwab and Fidelity have 2% cash back rewards cards (Visa/MC) and charge 1% foreign transaction fees, so still a 1% net reward. PenFed and some other credit unions and Internet banks have 0% foreign transaction fee cards. Discover has 0%. But yes, many/most have 3%, buyer beware. – Rocky Feb 18 '17 at 20:27

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