Earlier this year, organisers launched a new “virtual identity card” allowing students to search online for local concessions and ISIC Mastercard holders to top-up funds and check their balance via the interface. My answer to the above question would be a "Yes" but then prepaid Forex cards do happen to exist in our world and that can only be so if there are people who find these cards useful.
Before going to the costs associated with prepaid Forex cards, you need to consider another issue.
It is very important to watch the exchange rate at which you are loading a foreign currency onto your Forex card because your bank may not declare some charges to you upfront but charge you instead through a very bad exchange rate. The foreign merchant's bank or the bank whose ATM you use is also going to levy a charge on selling you their currency, may be any percentage because a bank never sells a currency without making a profit.
Sometimes there are so called 'special offers' on Forex cards that promise free ATM withdrawals abroad.
The only situation when a Forex card will make sense is when you do not wish to carry cash, your home currency is likely to depreciate against foreign currencies in the near future and you need to lock in the price of the foreign currency for your holiday expenses. The primary competitor of Forex cards is not travellers' cheques (TCs) because TCs are not accepted everywhere and are not easy to encash.
It is the first photo travel card available to Indian students in USD, Euro, GBP and AUD currencies that can be used at over 2 million MasterCard ATMs worldwide.
She previously worked in New York for HuffPost Live, covering everything from education and entertainment to science and politics. Before I get to talking about what makes prepaid Forex cards a little too expensive, let us first see the benefits of prepaid Forex cards.
The retail Forex conversion rate offered by a bank is usually 3 to 4% higher than the inter-bank rate. Similarly, when you sell your left-over Forex balance back to your bank, the buy-back rate may be extremely low as compared to the inter-bank rate.
Your own bank will add their currency markup of 3% over the already inflated rate charged by the foreign bank. Your bank knows this and instead of giving you some benefit for your deposit, will rather charge you for it.
I have verified the details of some of these offers and was told that the offer was limited to USD denominated Forex cards and that too on the first three withdrawals made within the offer period on a newly issued Forex card.
When you buy a Forex card and load with with a foreign currency, your cost of foreign currency gets determined. The primary feature and selling point of prepaid Forex cards is that these cards are safe and secure.
To know the inter-bank rate for USD against INR, go to Google and type 'usd inr rate' in lower case without quotes. A USD denominated card is good for travelling to a country where you can directly withdraw USD from an ATM, and there are not many countries like that.
Now you own a certain number of units of that foreign currency and any future change in the price of that currency is not going to impact you as long as you can contain your spending within your Forex card balance. The safety is due to the four digit PIN that is supposed to be known only to the customer and the security is that in case the customer loses the card, they can contact their bank to block the card and prevent its misuse. The ten most common currencies in which Forex cards are issued are: Australian Dollar, Canadian Dollar, Dirham, Euro, Japanese Yen, Singapore Dollar, Pound Sterling, Swiss Franc, Swedish Crona, and USD.
See, when you buy a Forex card in USD and use it for spending or withdrawing THB, you pay cross currency conversion charges and other markup. When you withdraw THB from an ATM in Thailand using your USD denominated Forex card, you incur cross currency charges in addition to all the other charges that you pay on your Forex card. That is what the foreign currency cost your bank and they will sell it to you at a 3-4% profit. In this process, when you first loaded USD to your Forex card, you actually bought USD by paying with your home currency and paid conversion charges and fees. Some other benefits of Forex cards that are advertised by banks are: built-in travel insurance cover, online usage and tracking, etc. That means, when you load a foreign currency onto your Forex card, you not only pay the reload fee, you also pay a 3-4% conversion charge. Again when you used that Forex card to pay in THB, you converted USD to THB and again paid conversion fees and charges.
Your bank may have compiled a list of 10 other benefits of their Forex card product but trust me, much of that would be irrelevant. Also, when you go to a bank to sell your spare foreign currency, they will buy it from you at a 3 to 4% discount on the inter-bank rate and also charge you a currency surrender fee.
But the Thai bank involved in this will take USD from your bank for the transaction (THB-USD conversion), and your bank will pay those USD to the Thai bank by taking INR from your account (INR-USD conversion).
Effectively, you cannot escape cross currency charges regardless of whether you use your ATM card or your Forex card.
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