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Journalism of Courage
Ajay Narang,33,zonal head at a leading bank,goes abroad on vacation every summer. Last year,Narang had to forgo his annual jaunt due to the global turmoil and the salary cut he had to take. But now,anticipating that the economy will revive in the next six to nine months and things will be hunky-dory again,he is itching to go abroad. As always,Narang will carry the bulk of the money he intends to spend in the form of a travel card,rather than as cash.
Pre-paid travel cards are gaining in popularity. According to Ravishankar,country head,Direct Banking and Cash Management Services,Yes Bank,Last year there was a fall in the demand for travel cards as corporate travel,which consumes most of the travel currency,was reduced significantly. Tourists also replaced overseas destinations with domestic ones. But demand should pick up this year. According to Sai Narain,general manager,Transaction Banking and CASA,Standard Chartered Bank,The demand for travel cards will always exist among the mass affluent and above families,who are unperturbed by the slowdown.
What is a travel card?
A travel card is a pre-funded card that offers a secure way of carrying foreign currency overseas. These cards are similar to debit cards: you only spend what is loaded in your card. Banks such as SBI,ICICI,Citibank,Corporation Bank,etc.
provide them. They are protected by a PIN and allow you to withdraw local currency from ATMs abroad. Cards issued by VISA can also be used for purchases at VISA merchant establishments. Most cards are issued either by VISA or by MasterCard and can be used wherever these platforms are operational.
The advantages
No worries. As you are not carrying foreign exchange or travellers cheque,you dont have to worry about theft. And since the card is not linked to your bank account,there is no fear of fraudulent withdrawal of money from your account if it is stolen.
No interest charge. You spend money that belongs to you,so no interest is payable. On the other hand,if a customer uses a credit card abroad for ATM withdrawals,he would be charged a host of charges,including a standard withdrawal fee,cross-currency conversion charge of 3.5 per cent,and interest on the amount withdrawn from the very first day. He could also get a poor currency conversion rate, says Narain.
Top-ups available. You can re-load these cards during the trip. Leave a signed copy of the re-load form and give authorisation to a family member. This person can approach the bank with the form and the amount. On submission of both,your card gets re-loaded.
Budget friendly. A travel card prevents overspending as you only spend what is loaded on the card. No overdraft or credit facility is available.
Maintains record of your expenses. A travel card helps keep track of your day-to-day balance via SMS. You can view your balance and your transactions online. The bank also sends you an email statement at the end of each month.
Protected against exchange-rate fluctuations. In case of credit cards,the rate of exchange applicable is the rate on the day of transaction. This rate could be unfavourable. In case of a travel card,the rate of exchange applicable is the one on the day you purchase the card. You can,to some extent,ensure that you get a favourable rate by monitoring the exchange rate before your trip.
How to buy one?
To purchase a card,you dont need to have an account with the bank you buy it from. Fill an application form and submit it along with the following documents: a copy each of your passport and visa,a copy of confirmed air ticket,completed Form A2 or any other forex documentation as mandated by FEMA,and PAN number or Form 60. Submit a cheque for the desired amount and the card is issued.
Upper and lower limits for loading exist: in case of the US dollar,the minimum amount is US250 varies from bank to bank and the maximum is US 10,000 for non-business travellers and US 25,000 for business trips per annum as per FEMA. Usually,the card expires two years from the date of issuance. You can withdraw the remaining cash from the card after your trip.
Additional facilities
Multiple currencies. If on a single trip you are travelling to more than one country,the bank can issue you more than one card for different currencies within the overall approved limit.
Insurance offered. Many banks offer free insurance with these cards. For instance,HDFC Bank provides Personal Accident Insurance death cover only of Rs 2 lakh and loss of baggage cover up to Rs 20,000.
Axis Bank provides cover for lost card liability up to Rs 2 lakh provided by Bajaj Allianz on Travel Currency Card. This insurance is valid from the time you report the loss of the card to Axis Bank. This card also offers a comprehensive travel insurance cover worth Rs 12.5 lakh,which covers loss of checked-in baggage,delay in arrival of checked-in baggage,loss of passport,flight delay allowance,hijack distress allowance,personal liability,missing connecting international flight during transit,and repatriation of remains.
Customer assistance service. It is a 24X7 service offered by VISA to its customers. You can call up in case of lost or stolen card,emergency card replacement or miscellaneous information that you may require overseas.
What not to do
Avoid using card to pay temporary charges. You may use the card to pay your hotel bills at the time of check-out,but avoid using it for checking in. If you do so,the funds on your card will be blocked till the time of bill settlement. For instance,at the time of check-in a hotel might block 800 from your card as advance. But at the time of check-out your bill may be only 500. The balance will be credited to the card account only after a gap. SBI credits the money back within 60 days; ICICI within 30 days; and so on.
Dont forget the ATM fee. Banks are entitled to charge a fee every time you use the travel card for cash withdrawal and balance enquiry. Hence keep the number of ATM transactions at the minimum.
Beware certain locations. Despite claims of worldwide acceptability,neither VISA nor MasterCard infrastructure is available in certain countries and remote locations. There you will have to fall back on good old cash.
