Can You Send Money Abroad Using a Credit Card? 4 Red Flags You Ignore

Yes, you can send money abroad using your Indian credit card, but it comes loaded with hidden charges (1-5%) and only supports merchant payments, making it costlier and less convenient than wire transfers through platforms like ExTravelMoney.

While international credit card payments disguise as a quick and easy solution, let’s break it down and look at why using a credit card for international money transfers is a bad idea, and what better, cheaper alternatives you can use instead.

Also Read: Travelling Outside India? Know The Charges of Using a Debit / Credit Card Abroad

Why You Should Never Use Your Credit Card for International Payments

1. Not Allowed for Peer-to-Peer Transfers

You can’t use an Indian credit card to send money directly to individuals abroad, like friends, family, or freelancers. Credit cards are allowed only for merchant payments such as university fees, hotel bookings, or tour packages, but only if the merchant accepts them.

For peer-to-peer international transfers, you’d need to go through a remittance platform that supports credit card payments. These platforms accept your card in India, then send the money abroad via conventional ways, like wire transfer, wallet-to-wallet transfer, or local bank networking, etc. However, only a few platforms accept credit cards and often charge high fees.

2. High Foreign Transaction Fee

Foreign transaction fees for using Indian international debit cards can range from 1% to 5%. 

Foreign transaction fee comprises the service fee and the forex markup. It is the profit applied by the card issuer (bank or financial institution) and the credit card company (Visa, Mastercard, etc) on top of the actual exchange rate. 

For instance, a ₹1,00,000 international transaction could cost anywhere between ₹1,000 – ₹5,000 extra just in markup fees.

3. GST on Foreign Transaction Fees

On top of the markup fee, 18% GST is levied on the markup amount. Since international credit card transactions do not fall under the RBI’s Liberalised Remittance Scheme (LRS), GST applies on the foreign transaction fee and not as minimal percentages on the transaction amount. This makes the GST charges excessively high.

So let’s consider the previous transaction of ₹1,00,000. If the foreign transaction fee charged is ₹5,000, the GST payable shall be ₹900!

4. Credit Card Limit

There is a maximum amount your issuer allows you to spend across all transactions, including domestic and international transactions. Large overseas payments may quickly eat into your available credit limit.

A Smarter, Cheaper & Safer Way to Send Money Abroad – ExTravelMoney

By now, it’s clear that using a credit card for international money transfers is expensive, limited, and often not even allowed for the transfers you actually need to make.

But there’s a better way, and it is wire transfers through ExTravelMoney.

So why choose ExTravelMoney?

• Live Rate Comparison: ExTravelMoney is a forex aggregator that lets you compare exchange rates from 6000+ RBI-authorised exchange stores and top banks. We help you choose the best deal at wholesale exchange rates so that you are not stuck with your bank’s or card company’s rigid exchange rates.

• No Foreign Transaction Fees: Apart from the forex markup of 0.5 – 0.7%, we charge zero service fees. Therefore, you are not charged with the GST on foreign transaction fees either.

• Supports Multiple Transfer Purposes: We facilitate outward remittance for all RBI-approved purposes, including university fee payments, family maintenance, travel bookings, NRI repatriation and many more. Wire transfer is a widely accepted payment method for all merchant and peer-to-peer transactions.

• 100% RBI-Compliant: Fully adheres to LRS (Liberised Remittance Scheme) of RBI. Therefore, wire transfers are subject to taxes such as TCS (Tax Collected at Source), which is refundable and GST on the amount sent abroad based on the government-set thresholds which is minimal.

• No Transaction Limit: Apart from the RBI annual outward remittance limit of USD 250,000, ExTravelMoney has not set any daily, monthly or annual thresholds.

Let’s consider an international money transfer for foreign university fee payment of ₹10,00,000. Following will be the charges for credit cards and ExTravelMoney: 

Applicable Charges	Credit Cards		ExtravelMoney
	minimum	maximum	minimum	maximum
Foreign Transaction fees/markup	₹10,000	₹50,000	₹5000	₹7000
GST	₹1800	₹9000	₹990	₹990
TCS	Not applicable to credit cards		Not applicable to wire transfers for educational purposes
Total Additional Cost	₹11,800	₹59,000	₹5,990	₹7,990

On one hand, credit card payments will cost you between ₹11,800 to ₹59,000. However, on the other hand, a wire transfer through Extravelmoney will only cost you an additional cost of ₹5,990 to ₹7,990. That means with ExTravelMoney, your minimum savings are ₹5810, and maximum savings are more than ₹51,010

Credit Card vs ExTravelMoney International Money Transfer – Comparison Table

Features	Popular Credit Cards	ExTravelMoney
Permitted transfer purposes	Merchant payments only	1. University fee payment 2. Overseas employment 3. Emigration fees 4. NRI repatriation 5. Film-making 6. International tour-related payments 7. Medical treatment 8. Living expenses of student abroad 9. Gift remittance 10. Maintenance of relatives 11. Conference / Training Visa 13. Emigration consultancy fees 14. GIC opening and fund transfer 15. Blocked account opening and fund transfer
Foreign Transaction Fee	1-5% (markup + service fee)	Zero service fees, forex markup of 0.5 – 0.7%
Taxes Applicable	18% of foreign transaction fees	TCS and GST charged on the amount sent abroad
Transaction Limit	Credit card limits applicable	RBI limit of USD 250,000 applicable

Also Read: Taxes Applicable on International Wire Transfer

How to Send Money Abroad with ExTravelMoney

1. Visit extravelmoney.com and select your beneficiary’s country and money transfer purpose.

2. Compare exchange rates from trusted forex partners and choose the best deal.

3. Provide beneficiary details, complete documentation and payment to the selected forex partner.

4. Sit back while your money reaches your beneficiary’s overseas bank account safely.

Sending money abroad using your Indian credit card is possible, but it is far from the smartest choice. Between layered fees, taxes, and several restrictions, you could end up spending much more than you planned. So, visit ExTravelMoney and save thousands on your next international money transfer.

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