Why is it Expensive to Use Credit Card to Send Money to India?

You can use your credit card to send money overseas. However, if you have to send money back home on a regular basis, credit card will be an expensive option. For instance, you will have to pay a high interest rate as “cash advance” from the day you initiate the transfer. There are chances you won’t be getting a competitive exchange rate and you will also end up paying more money as fees.

According to remittance experts, a direct debit, EFT (electronic funds transfer) or a transfer from the bank account will be a better option instead of using a credit card. You will not only get a better deal but also pay lower fees.

There is no doubt that a credit card is extremely useful if you wish to buy now and pay later. But if you are using it to send money to India or any other country, make sure you are aware of the fees, charges and fine prints. This will save you from paying too much for making an international transfer.

When can you use your credit card?

You can use your card when there is an emergency and you don’t have any other way to fund your money transfer. It can also be used, if you will be getting benefits from a reward program such as frequent flyer miles or cashback.  

Points to remember

Remember, not all remittance service providers accept credit cards as payment for funding an exchange. When you make a transfer, the credit card company will be charging you high interest rates on the cash advance from the day the transfer has been initiated. There will be several other fees and charges that you might have to incur when transferring money from your credit card. It can be an expensive option, especially if you have to send a large amount overseas.

Fees charged by remittance service providers is usually high because the card issuing company charges multiple fees to them each time a transaction is placed by a customer. Apart from a fixed fee for having a merchant account, the card issuing company also charges inquiry fee per transaction. Since money transfer companies end up paying a high premium to the card issuing company and their fees is massively marked up, they pass the cost to customers, making remittance expensive for them.

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