Travel & Spending · 7 min read
Forex card vs debit and credit cards for travelling abroad
Your regular debit card quietly charges 3.5 percent extra abroad. Here is how forex cards, credit cards and the 20 percent TCS rule actually compare in 2026.
Krish Dalal
Founder and editor, PaisaExpert. Master's in Business Management, SP Jain School of Global Management, London. · Last updated 2026-06-02
Travelling abroad is when the quiet fees come out to play. Most people plan the flights and the hotel carefully (our guide to finding cheaper flights helps there) and then lose a chunk of the savings to card charges they never see, because the markup is baked into the exchange rate on the statement. Knowing which card to swipe is worth a free dinner or two on any international trip.
The forex markup, the fee you never see
When you spend on a regular Indian debit or credit card abroad, the bank converts the currency at a rate that already includes a markup, typically around 3.5 percent, sometimes with a flat fee on top. On a ₹2 lakh trip, that 3.5 percent is ₹7,000 gone, invisibly. A zero-forex-markup card removes that, which is why a dedicated travel or forex product can pay for itself on a single holiday.
| Regular debit card | Forex card (zero markup) | Travel credit card | |
|---|---|---|---|
| Forex markup | Around 3.5 percent | 0 percent on many | 0 to 2 percent depending on card |
| Exchange rate | Bank rate (poor) | Locked when you load | Card network rate |
| TCS above ₹7 lakh / year | Yes (20 percent) | Yes (20 percent) | No, currently outside LRS |
| Best for | Avoid abroad | Predictable budgeting | Spends with reward value |
The 20 percent TCS rule, explained without the panic
Since these rules changed, a lot of travellers think they are 'losing' 20 percent. They are not. Tax Collected at Source on foreign spending is an advance tax, collected upfront and adjusted against your final tax bill. You reclaim it when you file your return. Here is the current shape of it in 2026.
- Forex cards and overseas debit-card spends fall under the Liberalised Remittance Scheme. Within a financial year, the first ₹7 lakh attracts no TCS, and spending above ₹7 lakh attracts 20 percent TCS.
- International credit-card spends made while abroad currently sit outside the LRS, so they do not attract TCS for now. This has been deferred rather than scrapped, so it is worth re-checking before a big trip.
- TCS is not a cost, it is a cashflow timing issue. It is adjusted against your income tax, so you get it back as a refund or set-off when you file. The real cost of a trip is the forex markup, not the TCS.
Frequently asked
What to do next
- Run your trip budget through the forex card calculator to see the markup you would pay on a regular debit card.
- Get a zero-markup forex card or a low-forex travel credit card before you travel, and leave the regular debit card for emergencies only.
- Always choose to pay in the local currency, never in rupees, at foreign terminals and websites.
- Keep your TCS certificates so you can reclaim any 20 percent collected when you file your return.