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The Best Credit Card in India for FX Spending

by A Trivedi & K V Sharma on
FX Shopping

The Bottom Line

The IDFC FIRST WOW! Credit Card is the best credit card in India for foreign currency (FX) transactions for most people. The FIRST WOW! is a lifetime free credit card and charges zero markup on foreign currency transactions.

It also offers an effective reward of 0.7% on all FX transactions, making it one of the few cards where you effectively earn rewards rather than pay fees on these transactions.

The Magnus Credit Card from Axis Bank is the single best credit card in India for all high spenders (> ₹1 lacs per month). On the face of it, the Magnus does not offer the best deal for FX transactions, charging a 2.0% markup and offering only 1.2% effective rewards, for a net cost of 0.80%.

However, including its monthly milestone rewards, the Magnus offers a net reward yield of 4.0-6.7% your total spend – domestic and FX. That is so much higher than what any other card offers, that we think it is worthwhile to rely on it as your single, all-purpose card.

If you are a high spender who is unwilling or unable to get the Magnus, consider the Infinia Credit Card from HDFC Bank or the Ultimate Credit Card from Standard Chartered Bank. Both these cards offer a 2.0% FX markup and give rewards of 3.3% on all transactions, leading to an effective reward of 1.3% on these spends.

All these cards, the Magnus, the Ultimate and the Infinia have a relatively high annual fee (₹5,000 – 12,500) and are only worthwhile if you can charge more than ₹1 lacs per month to card, domestically and overseas.

Our Pick
IDFC FIRST WOW! Credit Card
Lifetime Free, 0% FX Markup, 0.7% FX Rewards

The FIRST WOW! is the only card to offer 0% FX Markup AND rewards on FX spend. Issued against FD only.

Our Pick for High Spenders
Magnus Credit Card
So good that you don't worry about FX markup

Points worth ₹5K on monthly spend of ₹1 lacs+ put the Magnus in a league of its own.

Also Great
2% FX Markup, 3.3% FX Rewards

A great all-round card, that works well for FX transactions too

Also Great
Ultimate Credit Card
2% FX Markup, 3.3% FX Rewards

A great all-round card, that works well for FX transactions too


Who this is for

If you are looking for a credit card to use when traveling overseas or you want to buy good or services from websites that charge in foreign currency, this guide is for you.

Overseas travel can be quite expensive, often costing in ₹10’s of thousands or even more than ₹1 lacs per traveler, depending on the duration and destination. Most regular credit cards charge a high markup for the transactions you make while overseas, further inflating the cost.

Using the correct credit card can save you thousands of rupees on each trip. If that appeals to you, read on.


How we picked

Most credit cards in India usually charge a 3.5% markup on foreign currency (FX) transactions. This markup is applied to the rate offered by the card networks i.e. Visa and MasterCard.

You also need to pay an 18% GST on this markup, so the 3.5% actually ends being 4.13%.

This means if Visa or MasterCard rate for buying, say, 1 US dollar is ₹80, you would pay a 4.13% higher rate or ₹83.30 when you use the card to buy something overseas.

However, many cards have a lower markup, with some, like our pick, the FIRST WOW! giving a zero markup. This not only saves you the markup but also results in a lower GST hit.

That same US$1 item would cost you only ₹80 with the WOW!.

To find the best credit cards for FX transactions, we compiled the FX markup disclosed by the respective banks for each credit card. We compared that against the rewards offered on each card for these overseas transactions.

In some cases these rewards are in the form of cashback while in others, you earn some form of reward points, which much be converted into cashback, gifts or gift vouchers. For cards offering non-cash rewards, we used the conversion method that would give you the highest value for these reward points.

We selected 13 credit cards where the rewards earned on FX transactions were higher than the GST adjusted FX markup.

Table 1: Shortlist of Best Cards for FX Transactions

FX Markup FX Markup
with GST
Rewards
on FX
Transactions
Net Spread
for Bank*
Average Credit Card 3.50% 4.13% 4.13%
Bank of Baroda Varunah Premium** 2.00% 2.36% 3.75% -1.39%
Axis Bank Reserve 1.50% 1.77% 3.00% -1.23%
HDFC Bank Infinia 2.00% 2.36% 3.33% -0.97%
Standard Chartered Ultimate 2.00% 2.36% 3.33% -0.97%
YES Private 1.75% 2.07% 3.00% -0.94%
YES Private Prime 1.75% 2.07% 3.00% -0.94%
IndusInd Club Vistara Explorer 0.00% 0.00% 0.90% -0.90%
IDFC FIRST Private 0.00% 0.00% 0.75% -0.75%
IDFC FIRST WOW! 0.00% 0.00% 0.67% -0.67%
AU SFB Zenith 1.99% 2.35% 2.50% -0.15%
Bank of Baroda Varunah Plus** 2.00% 2.36% 2.50% -0.14%
RBL World Safari 0.00% 0.00% 0.46% -0.46%
Axis Bank Magnus 2.00% 2.36% 1.20%^ 1.16%
* Negative figures mean you earn net rewards while positive figures mean you pay a markup on net basis

^ Based on redemption of EDGE REWARD points on the portal @ ₹0.20 / point. See below for other options.

** The Bank of Baroda Varunah Cards are only available to Service Personnel in the Indian Navy.

We then checked the annual fee for each of these cards as well as the net reward yield that each card offered to figure out whether it made sense to use them either as a standalone FX credit card or as your primary credit card.

We eliminated cards where the annual fee was very high and the net rewards relative low.

Table 2: Eliminate Cards with Low Rewards & High Fee

Net FX Spread for Bank^ Net Reward Yield* Annual Fee (₹) Decision
BoB Varunah Premium** -1.4% 1.0% 2,499
Axis Bank Reserve -1.2% 50,000
HDFC Bank Infinia -1.0% 3.3% 12,500
SC Ultimate -1.0% 2.7% 5,000
YES Private -0.9% 1.3% 10,000
YES Private Prime -0.9% 1.3% 10,000
IIB Club Vistara Explorer -0.9% 2.2% 10,000
IDFC FIRST WOW! -0.7% 0.7% Free
IDFC FIRST Private -0.8% 50,000
AU SFB Zenith -0.2% 1.8% 7,999
BoB Varunah Plus** -0.1% 0.8% 1,499
RBL World Safari -0.5% 0.3% 3,000
Axis Bank Magnus 1.2% 5.9% 10,000
* On total spend, domestic and overseas based on our spending profiles for ₹1 lacs+ a month.

^ Negative figures mean you earn net rewards while positive figures mean you pay a markup on net basis.

** The Bank of Baroda Varunah Cards are only available to Service Personnel in the Indian Navy.


The Best Credit Card for FX Transactions

The IDFC FIRST WOW! Credit Card is the best credit card for FX transactions for most people. It is the only credit card in India to offer a zero annual fee and a zero FX markup.

That is not all. It also offers a 0.7% effective reward in form of reward points, each worth ₹0.25 i.e. 4 reward points per ₹150 spent.

This means that not only do you get the best exchange rate in the market, you actually save another 0.7% on top, with no annual fee to worry about.

The IDFC FIRST WOW! does require you to open a Fixed Deposit (FD) with the IDFC FIRST Bank. The value of this FD determines the credit limit you get with the card.

However, IDFC FIRST offers competitive FD rates. To further optimize the use of your funds, you can consider topping up the FD and getting a higher credit limit only when you plan to travel or buy a high value item from an overseas website.

Table 3: Feature Summary – IDFC FIRST WOW! Credit Card

Card
Joining Fee Free
Annual Fee Free
Min. Annual Credit Card Spend
for Fee Waiver
N/A
Income Criteria Salaried FD Required
Self-employed FD Required
Supplementary Card Fee Free
Foreign Currency Markup 0%
Foreign Currency Rewards 0.7%
Interest Rate 42% p.a.
Cash Advance Charge ₹250
Card Association Visa, MasterCard
* Excluding milestone rewards.

The Best Credit Card for FX Transactions for High Spenders

If you charge more than ₹1 lacs per month on your credit card domestically & overseas, the choice of the best card for FX transactions is harder. However this is a good problem to have because there are multiple cards that not only offer high rewards on FX transactions but also are excellent cards for use domestically.

As such, the choice will depend on your circumstances (including the ability to access some of these cards) and preferences.

Table 4: Viable Option for FX Transactions for High Spenders

FX Rewards

FX Markup
Overall Net
Reward Yield*
Annual Fee (₹)
-1.2% 5.9% 10,000
0.7% 0.7% Free
1.0% 3.3% 12,500
1.0% 2.7% 5,000
* On total spend, domestic and overseas based on our spending profiles for ₹1 lacs+ a month.

We are ignoring the Axis Reserve and IDFC FIRST Private here for now as both these cards have an annual fee of ₹50,000. While they may or may not offer better rewards, with such a high fee, they are likely relevant only for the ultra-high spenders and we will examine these cards separately.

The remaining 3 cards, all have an annual fee of ₹5,000 – 12,500, are all excellent cards for high spenders and all offer positive rewards on FX transactions even after paying the FX markup.

The Magnus Credit Card from Axis Bank should be your first choice since at 4.0-6.7%, it offers the highest net reward yield of any credit card in India for high spenders.

Table 5: Feature Summary – Magnus Credit Card by Axis Bank

Card by Axis Bank
Joining Fee ₹10,000
Annual Fee ₹10,000
Min. Annual Credit Card Spend
for Fee Waiver
₹15 lacs p.a.
Income Criteria Salaried ₹18 lacs p.a.
Self-employed ₹18 lacs p.a.
Supplementary Card Fee Free
Foreign Currency Markup 2%
Foreign Currency Rewards 1.2%*
Interest Rate 30% p.a.
Cash Advance Charge 2.50% with a minimum of ₹300
Card Association MasterCard
* Excluding milestone rewards.

On the face of it, it isn’t actually a great card for FX transactions since it charges a 2% FX markup and gives only 1.2% effective rewards (6 EDGE REWARD points per ₹100 spent @ ₹0.20 per point) for FX transactions. So you end up paying a net 0.8% markup for these transactions.

However, the Magnus offers rewards points worth ₹5,000 in every month that you charge more than ₹1 lacs to the card. So if your overseas spend helps you cross that ₹1 lacs mark in a month, it will help you earn ₹5,000 that month and more than make up for any FX markup you might pay.

If you can comfortably reach ₹1 lacs each month even without the FX transactions, then you have two options. First, if you are able to convert the EDGE REWARD points from the Magnus into Club Vistara Points or KrisFlyer miles (among other options) – that more than triples the value of the points.

In this case your effective rewards with Magnus on FX transactions shoot up to 4.2%, much higher than the 2% markup and make the Magnus the best card for FX transactions also.

If you are not able to use CV Points or KrisFlyer miles, then there is no benefit in charging your FX transactions on the Magnus, since you are already getting the milestone benefits every month anyway. In that case you should consider the IDFC FIRST WOW! as a dedicated credit card for FX transactions.

That switch will improve your reward yield on FX transactions from -0.80% to +0.67% – an improvement of nearly 1.5%. This may only make sense if you spend at least a few lacs a year on these transactions. Otherwise the hassle of managing another card for a few thousand rupees may not be worth the effort.

If you are unwilling or unable to get the Magnus, you should go for either the HDFC Bank Infinia or the Standard Chartered Ultimate credit cards, in that order.

Table 6: Feature Summary – Infinia Credit Card by HDFC Bank

Card by HDFC Bank
Joining Fee ₹12,500
Annual Fee ₹12,500
Min. Annual Credit Card Spend
for Fee Waiver
₹10 lacs p.a.
Income Criteria Salaried Invite only
Self-employed Invite only
Supplementary Card Fee Free
Foreign Currency Markup 2%
Foreign Currency Rewards 3.3%
Interest Rate 23.88% p.a.
Cash Advance Charge 2.50% with a minimum of ₹500
Card Association Visa
* Excluding milestone rewards.

Table 7: Feature Summary – Ultimate Credit Card by Standard Chartered

Card by Standard Chartered
Joining Fee N/A
Annual Fee ₹5,000
Min. Annual Credit Card Spend
for Fee Waiver
N/A
Income Criteria Salaried N/A
Self-employed N/A
Supplementary Card Fee Free
Foreign Currency Markup 2%
Foreign Currency Rewards 3.3%
Interest Rate 45% p.a.
Cash Advance Charge 3.00% with a minimum of ₹300
Card Association Visa, MasterCard

Both these cards offer 3.3% rewards on all your spend including the transactions in FX. Both of them charge a FX markup of 2%, leaving you with a net reward of 1.3% on these transactions.

However, both these cards will usually only make sense (and earn you 3.3% reward) if you spend more than ₹1 lacs a month or more via them. So, except for the ultra-high spenders, rest of us will need to use them as our primary cards. Which is fine, since they are among the best credit cards in India.

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