Where You Should Use Debit Cards in India

Even though I have given the merits of using credit card, you should take and use the debit-cum-ATM card with you, even while travelling abroad. So, when you need cash and want the best exchange rate on foreign currency, you should use your debit card and withdraw from an ATM. This will usually get you the wholesale exchange rate that are reserved for interbank purchases, and which is better than the exchange rate you would get if you used a credit card.

There is one catch though – the Reserve Bank of India (RBI) had mandated in Feb 2013, that all credit and debit cards, by default will be disabled for international transaction. However, if the user explicitly requests for international usage, the issuer will allow so, with the caveat that the cards should be EMV chip based and not simply with a magnetic strip.

Therefore, credit cards can be a much more powerful and flexible option than debit cards. Youre protected from identity theft, your purchases can be protected from defects and failures, and disputes are handled quickly without you having to pay up just to get your money back. However, credit cards are still credit, and youre in debt for the purchases you make. You pay interest on them, and not being able to handle your credit wisely can lead to serious financial problems.

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So here’s a note of caution – If you can manage to stay on budget with a credit card and pay off the amount you owe regularly, then go ahead. If you are not disciplined and will land in credit card debt, then I am sorry this is not an option for you.

There are blogs and online forums which will tell you the benefits of travel credit cards. However, most of them are for US residents and some for Europeans. There are hardly any for Indians. So this sub-section will tell you on which credit card you should consider. First up, let me tell you that I do not have any affiliation with any credit card issuing company or agent. That said, when comparing credit cards; go in for travel related cards. Co-branded cards are the best. For those who don’t know, co-branded cards are those that have as association between the card issuing bank and say, airlines and /or hotels etc. These cards are therefore optimized for travel benefits. There are other cards which will also offer you some benefits like airmiles, but at a much reduced rate. If you have the wherewithal to get Platinum or higher credit cards, go for it, even if it means paying an annual fee of anything between Rs. 2500 to as high as Rs. 50000. The mileage or points that you earn coupled with other benefits will more than make up for this fee.

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