Common Credit Card Mistakes Indians Make Abroad: How to Avoid Costly Pitfalls in 2025

Going to another country is a cool thing that lots of Indians do every year. Chilling in Bali, buying stuff in Dubai, working from Europe, or studying in the US—going somewhere else gives you new stuff to see, food to try, and chances to do things. But with that fun stuff comes a big job: keeping track of your money. When you’re overseas, credit cards can be super helpful or a total pain.

Sadly, many Indian travellers mess up with credit cards and end up with big fees, cards getting declined, or even security problems. The great thing is, you can usually avoid these issues if you know what to do and get ready ahead of time.

In this long guide (over 2000 words!), we’re going to look at the most common credit card mistakes Indians make when they’re in other countries. We’ll give you simple ways to fix them, based on what’s going on in banking around the world, rules from the RBI in 2025, and stories from other travellers. Whether you’re just visiting, fly a lot, or travel for work, this info will help you spend wisely and stay safe everywhere you go.

 

Mistake 1: Not Informing Your Bank About International Travel

Card decline due to suspicious foreign activity is one of the most common problems faced by Indians living abroad. Banks make use of fraud detection systems that flag all transactions coming from unfamiliar locations. So, if you suddenly swipe your card in Paris after having used it only in Pune for months, your bank will instantly assume fraud and block your card.

Why It Happens

AI-driven fraud filters monitor patterns such as:

• Unusual geography
• High-value, rapid transactions
• Currency differences
• Online vs. offline payment behaviour

If such deviations are not pre-notified, the system may auto-block the card as a security measure.

RBI Travel Notification Recommendation (2025)

Well, the RBI encourages cardholders to inform their bank before leaving India. Fortunately, banks such as HDFC, SBI, Axis, ICICI, IDFC FIRST, among others, let you mark a travel alert via:

• Mobile banking apps
• Net banking
• Customer care
• SMS (for selected banks)

How to Avoid This Mistake

• Tell your bank about your trip at least 2-3 days before you leave.
• Make sure you list every country you’re visiting, even if it’s just for a layover (like in Doha or Singapore).
• Bring at least two credit cards, just in case one gets blocked.

This will save you from the awkward moment of having your card declined when you’re trying to pay at a hotel, restaurant, or airport.

Mistake 2: Not taking foreign exchange markup fees into account.

Most Indians do not know that forex markup fees apply to international credit card transactions, normally around 2% to 3.5% plus GST. Aggregate over multiple transactions, and these charges add up pretty fast.

Example

If you spend ₹1,00,000 abroad:

• Forex markup @ 3.5% = ₹3,500
• GST @ 18% ≈ ₹630
• Total extra charges ≈ ₹4,130

Multiply that across a 10-day shopping-heavy trip, and the numbers climb significantly.

Better Alternatives: Zero Forex Markup Cards

Several premium and travel cards have now started offering zero foreign exchange markup, which can save thousands.

Top zero-forex options include:

• HDFC Infinia
• HDFC Diners Black
• ICICI Emerald Private
• IDFC FIRST Wealth Card
• RBL World Safari
• Niyo Global Card (Debit)

Why Forex Markup Matters

Without realising it, travellers lose money not just on exchange rates but also on fees stacked silently upon each transaction. Choosing the right card ensures maximum savings.

 

Mistake 3: Falling for Dynamic Currency Conversion (DCC)

One of the sneakiest travel pitfalls is Dynamic Currency Conversion.

What is DCC?

When paying abroad, some POS machines give a choice:

• Pay in INR, or
• Pay in local currency

Paying in INR sounds convenient, but it’s a trap.

Why DCC Is Bad

• Terrible exchange rates
• Additional hidden markup (5–7%)
• Double conversion charges may be applicable.

Golden Rule

Always pay in local currency. Always.

Wherever you go, be it Japan, France, Dubai, Thailand, or the US, decline the INR conversion at the terminal.

 

Mistake 4: Using Credit Cards to Withdraw Cash from ATMs

Several Indians think that they can safely withdraw foreign currency on a credit card while abroad. This is an extremely expensive mistake.

Why It’s Costly

• Cash advance fee: 3–4%
• Interest immediately without a grace period
• High APR interest 36–45% per year
• ATM withdrawal fee (of a foreign bank)

What starts as a withdrawal of ₹20,000 can swiftly become a liability of ₹23,000+

Better Options

• Prepaid forex cards: Thomas Cook, BookMyForex
• Niyo Global debit card
• Multi-currency travel cards

These usually offer less expensive ATM withdrawals and better currency exchange rates.

 

Mistake 5: Not maximising travel rewards and benefits.

Most Indian travellers don’t fully utilise the benefits offered by their credit cards abroad.

Here’s what you might be missing:

• Accelerated reward points on foreign spends
• Airport lounge access-domestic + international
• Free travel insurance
• Lost baggage and trip delay coverage
• Hotel and flight upgrades
• Itinerary and reservation concierge services

Popular Cards with Strong Travel Benefits

• HDFC Infinia – 5x points, unlimited lounge access
• American Express Platinum – international lounges, concierge
• ICICI Rubyx – 2x rewards + low forex
• Axis Atlas – travel points redeemable for flights and hotels

Using the right card abroad can cut costs on hotels, dining, and airport charges significantly.

 

Mistake 6: Not taking care of credit card safety abroad

With international digital fraud on the rise, Indians travelling overseas are vulnerable to a number of risks:

Card skimming

• Fake POS terminals
• Public WiFi hacks
• Phishing attacks
• Pickpocketing in tourist areas

RBI Mandated Protections – 2025

• Compulsory 2FA for cross-border online payments
• Real-time transaction alerts
• Tokenisation support for global mobile wallets

Security Tips While Travelling

• Whenever possible, always use chip-and-PIN or tap-and-pay, not magnetic swipe.
• Avoid using public WiFi for any financial transaction.
• The feature is enabled globally; merchant blocking is to be turned on selectively.
• Use Apple Pay, Google Pay, Samsung Pay where accepted.
• Never give your card to waiters; instead, request that they bring the POS machine.
• Always check an ATM slot for tampering before inserting your card.

Being alert means avoiding big financial losses.

 

Mistake 7: Overspending without transaction monitoring

Travelling abroad often increases impulse spending—outlet malls, duty-free shops, night markets, and tourist attractions add up quickly.

Why This Is Dangerous

• You may unknowingly go over your credit limit.
• You may miss fraudulent transactions.
• You may be charged high interest if you cannot pay in full.

How to Stay on Track

• Set daily or international spending limits through banking apps.
• Switch off international transactions when not in use.
• Track spending in real time through apps like CRED, OneCard, or bank apps.
• Create a travel budget and stick to it.

Monitoring helps avoid bill shock when you are back in India.

 

Mistake 8: Carrying only one credit card, or the wrong card

Card acceptance does vary by region.

USA: Visa, Mastercard, and Amex are widely accepted

Europe: Visa > Mastercard; Amex limited

Japan: Mastercard is strong; some smaller businesses accept only cash

Middle East: Visa and Mastercard are dominant

Australia: All networks are widely accepted

What Happens If You Carry Only One Card

If the network isn’t accepted, you’re stuck without a means of payment—a stressful situation when abroad.

Ideal Travel Wallet

Carry:

• 2 credit cards: Visa + Mastercard OR Visa + Amex
• 1 prepaid forex/travel card
• A small amount of local currency in cash

This combination ensures seamless transactions anywhere.

 

RBI Regulations Impacting International Credit Card Usage (2025)

India’s payment ecosystem has seen considerable modernisation under the RBI Payments Vision 2025. What does this mean in the context of international travel:

Key RBI Guidelines

• Two-factor authentication for cross-border transactions
  Ensures better fraud protection.
• Liberalised Remittance Scheme (LRS) cap of USD 250,000 per financial year
  Covers:
  1. Tuition
  2. Travel
  3. Medical expenses
  4. Investments abroad
• Compulsory transaction alerts
  SMS/Email alerts help in the detection of unauthorised usage.
• Stricter reporting norms for corporate and business credit cards
  Prevents misuse during international travel.
• Tokenisation for cross-border online payments
  Card numbers are replaced with secure tokens.
• Risk-based authentication for foreign merchants
  Reduces friction while maintaining security.

Knowledge of RBI regulations helps to conduct transactions smoothly and within the ambit of the law.

 

Real-Life Stories from Indian Travellers

Case 1: Mumbai Techie in London

Rahul’s HDFC card got blocked after a few high-value spends in London as he had not set a travel alert.

Loss: ₹15,000 on account of emergency forex withdrawals.

Lesson: Always notify your bank before travelling.

Case 2: Delhi Family in Singapore

The family used a credit card to withdraw cash from an ATM for convenience.

Result: a bill carrying 40% extra charges in the form of cash advance fees and immediate interest.

Lesson: Never withdraw cash using credit cards abroad.

Case 3: Bangalore Blogger in Dubai

She changed from a general card to a zero-forex-markup card before she travelled.

Savings: ₹8,000 on shopping alone.

Lesson: Get the right travel card.

 

Your Essential 2025 Travel Finance Checklist

Before you get on a plane, use this checklist to avoid common credit card pitfalls:

• Inform your bank of your travel dates.
• Use zero-forex-markup cards for all international expenses.
• When you travel to another country, it’s a good idea to use their money. 
• Try not to take out cash from ATMs when you’re overseas. 
• Only turn on the features you need on your credit card, like using it for bills or at ATMs. Make sure you have two-factor authentication set up and keep your mobile wallet secure. 
• Before you go, decide how much you can spend each day or week.
• Bring along multiple credit cards from different issuing banks, and bring with you a prepaid travel card that you can use in an emergency. 
• Track your daily spending while travelling abroad by using your bank’s app to monitor your accounts. 
• Lastly, save the customer service contact number for each of your financial institutions, in case you experience any problems during your travels.

Following these tips should help you have a smooth and easy time with your money when you’re travelling.

 

Final Thoughts:

It’s important to remember that you want your trips to create lasting memories for positive reasons, not because of large amounts of money that were charged onto your credit cards or other financial problems you encountered while travelling. 

When choosing to travel abroad with your credit cards, you must learn how to manage your credit card use wisely before you travel. By choosing the appropriate credit card(s) for your situation, avoiding hidden fees, safeguarding your credit card(s) and learning the regulations, you could potentially save a lot of money. 

Take advantage of amazing rewards, and save yourself from worrying about your credit card transactions as you travel throughout the world. Travel safely and enjoy your trips, and don’t let your credit card bills overwhelm you!