Last Update April 2012:  Contrary to belief, India has a modern credit card payment system in place, accepting several of the major credit cards on the market. These cards can be used at restaurants, hotels, shops, supermarkets, and more, just as at home. Chances are you already own a credit card which will suffice when traveling, but tourists need to be armed with the most access to buying power and/or cash when traveling abroad.

I always carry a debit card (Visa), my regular credit card (Visa) and of course, my Skymiles American Express (gotta keep racking up frequent flier miles). What works best for each traveler is a personal choice. Below are some helpful tips to cover in preparation of an Indian adventure:

1. Carry a Visa or Mastercard issued credit/debit card. Amex and Discover just don’t have the coverage in India as the other two behemoths.

2. If you can’t get a credit card because of a bad credit history then sign up for a pre-paid credit card. These are widely available through online offers but read the fine print before applying. Applicants send an opening payment which becomes the “spending limit”. At the end of the month a statement is sent, payment is due for any purchases, and the monies received will be credited back to your spending limit much like a regular credit card. This will not only help to improve a low credit score but ensure you have an alternative form of payment beyond cash.

3. At the very least bring a debit card to India. ATM’s are sprawled across the country making cash withdrawals easy both in terms of access and not having to haggle on exchange rates. Your bank will automatically assign an exchange rate based on the open market. A service charge ($2-$5 on average) will be deducted from your bank account so withdraw the daily maximum amount to avoid multiple fees from multiple smaller withdrawals.

TIP: Avoid using debit cards at currency exchanges where additional fees may be incurred on top of ATM service charges.

4. Carry a back-up. Travelers with one card can be stuck should an issuing bank have to cancel accounts abruptly for security reasons. Bring a credit card and separate debit card with your trip’s full budget needs available.

5. India’s ATM PIN system is set to accept four (4) digits only at this time. International travelers will need to change PIN codes from anything more than a standard 4 digit code to prevent declined transactions.

6. Make photocopies of any credit/debit cards before traveling. This should include a front and back copy of each card. Block out the expiration date, personal photo and signature line. Leave a copy with friends, family or spouse and remember to bring a personal copy which can be stored inside your luggage. If you ever lose a credit card or suspect your number has been stolen even though you hold the card, it can be canceled right away. The majority of problems with the cancellation of credit cards occur during travel internationally. Many travelers forget issuer names and numbers wasting valuable time when it could be at your finger tips.

6.5 Consider carrying credit card information in digital form while you travel. Some USB flash drives let you encrypt data, protecting your photocopied information from prying eyes. If you lose your credit card while abroad, simply decrypt the file on a computer. You’ll be able to see a copy of your card and access important information.

7. If traveling with a partner or spouse, stay one step ahead with separate credit cards issued in separate names. Many couples have one account number issued with cards for each name. If one person loses their card, the other card by default is also canceled as they share the same account number. Request separate account numbers for individual cards from your issuing bank.

8. Inform your credit card issuing bank of your travel plans including dates of travel and destination. Some banks and credit unions cut off credit cards that are used 6 or more times in one day, to try and stop thieves from using stolen cards. Communicating with your bank beforehand can alleviate any reactivation hassles.

9. Be aware of conversion fees that many banks assess to convert charges in foreign currencies to dollars. Some banks do and some banks don’t charge a fee, generally 1% of the purchase amount. If you carry several cards, check with the issuers to see which one offers the best deal on foreign currency conversion.

10. Avoid merchant currency conversions. Store owners will offer to convert purchases into your home currency but charge a fee as high as 7%, pocketing the difference without your knowledge. Have charges processed in the local currency to receive the best exchange rate as noted above in tip #3.

Bonus Tips

11. If the magnetic swipe stripe doesn’t work while paying at merchant establishments, don’t keep swiping. Credit cards are blocked after 3 attempts. Avoid the hassle of having to call your bank, explain the situation and reinstate your card by asking the merchant to manually enter the card number. The option to manually issue a charge is usually located at bottom side of machine or by simply entering in the account number. Thanks goes to Shivi Kanwar at www.aapoaapshimla.com for this tip which I was unaware.

#CreditSmartIndia