Just like many of you, I make international purchases online using my credit cards. Most of the time this is the easiest, hassle free when compared to wire transfers and sometimes this is the only option to pay. I have read in magazine articles that using Credit Card is recommended and can be cheaper than Traveller’s cheque or Currency conversion while travelling as well.
Many of the international transactions are in US Dollars and it will be converted to local currency (Indian Rupees) by your credit card issuing bank to prepare your statement. I never thought there will be differences in the conversion rates charged by them. Out of curiosity, I decided to check this out today between the two credit cards I have from two different banks (Corporate Card & Personal) and below are my findings.
(RBI Rates are taken from the official reference rates for that day published by RBI on their website. Conversion rates are always different depending on whether you are Buying & Selling foreign currency)
I am not a banking expert, so I will not risk into giving any explanation for the above. What I learned from doing this exercise is that before you do a large international transaction with your (Indian Rupee) Credit Card it is better to do a small transaction and check the rates that your bank is charging you. I see no use in complaining to your bank after the transaction is done as I am sure your bank would have covered all this in the big booklet of ‘terms & rates’ they send to all of us (on RBI instructions) which I am sure none of us read, and even if we read we don’t understand the jargons.
Also published on Medium.