How to Save on Foreign Transaction Fees With Your Credit Card?
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Paying in the local currency is usually the smartest option. When you pay in INR, you may be subject to Dynamic Currency Conversion (DCC), which could result in a worse exchange rate and additional fees from your bank.
While prepaid cards allow you to lock in exchange rates, a zero-forex credit card offers better liquidity, earns reward points on international spends, and eliminates the need for manual reloading. It is often the more convenient option for high-value transactions and hotel bookings.
A zero-forex card may benefit you if you travel abroad more than once a year or frequently make online purchases from foreign countries. It removes the normal markup, so you pay only the base exchange rate.
Yes. If you buy from a website headquartered in another country or that charges in a foreign currency, you may incur a markup or DCC fees, depending on the currency you select at checkout.
Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein
Introduction
Travelling to a new country is exciting, but managing your money abroad can be challenging due to hidden fees.
If you use your credit card overseas, you may notice that the final charge is higher than you expected. This happens because banks add extra processing fees to convert Indian Rupee (₹) into the local currency.
Understanding how these fees work can help you spend wisely and save money while travelling.
Table of Contents
What Are Markup Charges and How Do They Affect International Spending?
Markup charges are service fees that your bank adds when you spend in a foreign currency.
After your purchase goes through the card network and receives the standard exchange rate, your bank adds its own margin.
This fee may seem small at first, but it can add up quickly, especially if you make big purchases or stay at luxury hotels. Over time, it can significantly reduce your travel budget.
Another fee to watch out for is the DCC markup fee. This happens when a foreign merchant lets you pay in Indian Rupees (₹) instead of the local currency, like Dollars or Euros.
This process is called Dynamic Currency Conversion (DCC). While it may seem convenient to see the amount in your own currency, it usually ends up costing more. The exchange rate from the merchant’s bank is often worse than your issuing bank’s rate, and many Indian banks now add an extra fee for these transactions.
Tips to Minimise Foreign Transaction Costs and Zero Forex Cards
When you spend money abroad, always choose to pay in the local currency to save money. Choose the local currency option if the card machine asks whether you want to pay in Rupees or the local currency. This method lets your bank handle the currency exchange, which normally gets you a better rate and helps you avoid paying extra DCC fees.
Frequent travellers may also want to consider getting special travel cards or zero-forex cards. You only pay the actual conversion rate with these cards, not the customary markup. Many of these cards also offer perks like free access to airport lounges, concierge services, and travel insurance, making them a wonderful choice for international travel.
Real-time alerts can also help you keep track of your spending. This allows you to track expenses instantly. Additionally, keep in mind the LRS (Liberalised Remittance Scheme) guidelines: currently, international credit card spends up to ₹7 lakh per financial year do not attract TCS (Tax Collected at Source). For frequent travellers, a zero-forex credit card is one of the most efficient tools for both planned and last-minute international spending.
Conclusion
Managing your money while travelling doesn't have to be difficult. You may spend less on fees and more on experiences if you pay in the local currency and use zero-forex cards. Understanding how markups and conversions operate will help you feel more in control of your travel expenses.
At Kotak Mahindra Bank, we want you to enjoy your travels without worrying about complicated charges. We offer credit cards designed for international use, with clear benefits and global acceptance. Whether you want travel rewards or easy spending abroad, our team can help you find the right card. Contact Kotak Mahindra Bank to choose your ideal travel card and spend smarter on your next trip.
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