Managing money during a trip
Last week, when
IT professional Arvind Shah stepped out at New York's John F Kennedy airport,
he was in a tizzy. With precisely one hour to make it to an important client
meeting, Shah hailed the first cab that came his way, only to find that he had
no small change to pay the driver.
While Shah was carrying cash and cards, both, the
currency notes were all of large denominations and impractical for small
payments and purchases. In fact, most international travellers make such
mistakes at some time or the other.
A well-thought out plan can however help you get
rid of such inconveniences during vacations or on business trips.
Break it up
Just as one
would not invest all of ones' savings in one stock or bond, a balanced travel
money portfolio ideally includes forex and credit cards, debit cards,
travellers cheques, and cash. Avijit Nanda, president of Times of Money,
recommends that a person should roughly keep about a third of money in the form
of cash and divide the rest amongst the others.
The most recent and popular instruments, amongst
these are the travel or forex cards which are prepaid, similar to those that
you have for mobile connections. Individuals can put in some money here at a
bank, say like $2,000 for a trip, and then withdraw it at any location abroad
using the card from any ATM.
Travellers cheques
The advantage
with travellers cheques is that they are not exposed to the vagaries of
technology, like computer or ATM failures at remote and cold locations.
Moreover, travellers cheques issued by companies
like American Express and others, are in a range of currencies such as the US
Dollar, Pound Sterling, Euro, Japanese Yen, Australian Dollar, and Canadian
Dollar.
"We find that a lot of seasoned travellers
use travellers cheques as an innovative, low cost way of hedging against the
risk that travel funds won't be available. Here, you get a physical, tangible
store of value. Better still, it allows travellers to budget their money.
International debit card
Using an
international debit card is another convenient option that travellers can
resort to. However, using a rupee card for foreign purchases is not as
attractive because of the heavy inter-change rates that apply to such transactions.
"The charges that a credit card issuer may
levy are 3.5% over the exchange rate as foreign currency mark-up. The advantage
is that a credit card or a debit card can be blocked in case of loss or theft
providing better security as compared to travellers cheques," says
Prashant P Joshi, managing director & head of private & business
clients (India) at Deutsche Bank AG.
Cash and Carry
As far as carrying cash is concerned, they are
governed by FEMA guidelines which states that you can carry foreign currency up
to $2000 on the basis of self-certification. If you are travelling as a family,
then each individual is allowed to carry this amount.
When travelling to Nepal and Bhutan, you can carry
as much Indian currency as you wish, but there is a cap on the number of Rs 500
or Rs 1000 notes that you can carry. Ask IT professional Krantik Bardoloi who
was tuck with the money but had to come back to convert them into
100-denomination notes before he could go back into the country.
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