Going abroad for a holiday? How to split your travel budget between cash, forex cards and credit cards to save money

Planning an international holiday involves more than booking flights and hotels. Indian travellers also need to decide how much foreign currency to carry, whether to load money onto a prepaid forex card or use an international credit card, and how much cash to keep for emergencies. Choosing the wrong payment method can increase the cost of a trip through currency conversion markups, ATM withdrawal fees and other charges.

A practical approach is to spread travel money across different payment options rather than depend entirely on cash or a single card. While cash remains useful for small purchases and local transport, cards offer convenience for hotel bookings, shopping and restaurant bills.

Sai Shankar, Chief Business Officer at Niyo Forex, recommends keeping 10-20% of the travel budget in physical cash, making 60-70% available through cards and retaining another 10-20% as a backup reserve. These are indicative allocations rather than fixed rules, and travellers should adjust them based on their destination, trip duration and spending habits.

There is no universal formula for dividing an international travel budget. The payment mix depends on the country being visited, how long the traveller plans to stay and whether local merchants widely accept cards.

According to Shankar, travellers can use the following indicative allocation as a starting point:

• Physical cash: 10-20%: Useful for small purchases, tips, local transport and payments at shops or establishments that do not accept cards.
• Cards: 60-70%: Can be used for hotel payments, restaurant bills, shopping and other routine expenses. Travellers can split this amount between prepaid forex cards and international credit or debit cards.
• Backup reserve: 10-20%: Keep this amount accessible through a separate payment option to deal with emergencies, declined transactions or card-related disruptions.

The allocation should also reflect the destination's payment infrastructure. Travellers visiting countries where cash remains widely used may need to carry more physical currency. In card-friendly destinations, they can rely more on electronic payments.

"Cash is useful for small purchases, tips, local transport and merchants that do not accept cards," Shankar said. He also recommends carrying at least two independent payment options rather than depending on a single card.

A prepaid forex card is not necessarily cheaper than an international credit or debit card. The actual cost depends on the exchange rate offered by the issuer, foreign currency markup and other charges associated with the card.

A prepaid forex card allows travellers to purchase foreign currency in advance and load it onto a card. Some cards also support multiple currency wallets, allowing users to hold different currencies for different destinations. This can help travellers lock in an exchange rate before departure and manage spending against a preloaded balance.

However, loading and unloading fees, issuance charges and international ATM withdrawal fees can increase the overall cost.

An international credit or debit card, on the other hand, allows travellers to spend directly from their credit limit or bank account without preloading foreign currency. Some cards offer zero forex markup, which can reduce the cost of international transactions.

Shankar said both prepaid forex cards and credit or debit cards can offer zero forex markup. Travellers should therefore compare the complete fee structure instead of assuming that one category is automatically cheaper.

Before choosing a card, travellers should check:

• Forex markup: The fee charged by the card issuer over the applicable currency conversion rate.
• Exchange rate spread: The exchange rate offered by the issuer or forex provider may differ from the prevailing market rate, even when the card advertises zero forex markup.
• Loading and unloading fees: Prepaid forex cards may charge users for loading or withdrawing unused foreign currency.
• Joining and annual fees: These should be factored into the overall cost of holding a card.
• ATM withdrawal charges: Cash withdrawals abroad may attract fees from both the card issuer and overseas ATM operator.
• Merchant surcharge: Some overseas merchants may levy an additional fee on card transactions to cover payment processing costs.

Cards with zero forex markup and no joining or annual fees may offer better value, particularly for frequent international travellers. However, rewards and complimentary airport lounge access may come with spending or eligibility conditions.

The cost of withdrawing foreign currency abroad depends on the card used and the charges levied by the issuer and ATM operator.

A prepaid forex card may charge a fixed fee for every cash withdrawal. An international debit card may offer lower or zero withdrawal fees, depending on the bank and card variant. However, the overseas ATM operator may levy its own charge.

Credit cards are generally best avoided for cash withdrawals abroad. These transactions are treated as cash advances and can attract withdrawal fees, foreign exchange markup and interest from the date of the transaction. They generally do not enjoy an interest-free period.

Shankar recommends checking the issuer's withdrawal fees, forex markup, ATM limits and free-withdrawal allowances before travelling.

Travellers should also watch out for Dynamic Currency Conversion (DCC). An overseas merchant or ATM may offer to convert a transaction into Indian rupees instead of charging it in the local currency. This conversion may involve an unfavourable exchange rate. Choosing the local currency is generally preferable.

Loading the entire holiday budget onto one forex card may appear convenient, but it can leave travellers without access to money if the card is lost, blocked or declined. Similarly, carrying excessive physical currency increases the risk of theft or loss.

Shankar recommends diversifying payment options by carrying some physical cash, using a prepaid forex card or international credit or debit card for routine spending, and maintaining a separate backup card.

Travellers should also save their card provider's international helpline number, enable transaction alerts, check international usage settings and understand overseas ATM withdrawal limits. Keeping the backup card in a separate location from the primary card can ensure access to funds if the latter becomes unavailable.

The key is to compare the complete cost of different payment methods before departure and avoid relying on a single source of funds. This can help travellers manage currency conversion costs, minimise unnecessary charges and handle payment disruptions during an overseas holiday.

Kirti jha

Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.

Get Latest real-time updates

Catch all the Instant Personal Loan, Business Loan, Business News, Money news, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

HomeMoneyPersonal FinanceGoing abroad for a holiday? How to split your travel budget between cash, forex cards and credit cards to save money

✕

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.