Traveling abroad is a dream for many, but managing finances while traveling can be a bit tricky—especially if you have a low CIBIL score. The CIBIL score, a reflection of your creditworthiness, plays a significant role in determining your financial options, including access to credit cards. However, the good news is that there are credit cards specifically designed for individuals with a low CIBIL score. With the right approach, you can use a credit card for low CIBIL score to manage your expenses efficiently during international travel. In this article, we’ll explore how to use a credit card for low CIBIL score while traveling internationally, and the tips and strategies that can help you make the most of it.
Understanding CIBIL Score And Its Impact On Credit Card Eligibility
Before we dive into how you can use a credit card for low CIBIL score for international travel, it’s important to understand what a CIBIL score is and how it affects credit card eligibility. The CIBIL score, ranging from 300 to 900, is a number that reflects your creditworthiness. Lenders and financial institutions use this score to determine how reliable you are as a borrower. A higher score (750 and above) indicates that you are likely to repay loans and credit dues on time, while a lower score suggests a higher risk of default. A low CIBIL score, typically below 600, can make it difficult to qualify for a traditional credit card, especially those with attractive benefits like rewards, discounts, and travel perks. However, some credit cards are specifically designed for individuals with lower scores. These cards often come with more manageable credit limits, higher interest rates, and fewer rewards. Despite these limitations, they can be useful for international travel with the right strategies.
How To Use A Credit Card For Low CIBIL Score For International Travel?
Choose the Right Card
When selecting a credit card for low CIBIL scores, ensure that the card is designed for international use. Some credit cards for low CIBIL scores offer benefits like foreign exchange facilities, low foreign transaction fees, and emergency cash advances, making them more suitable for travel.
Look for cards that:
- Offer low foreign transaction fees: Many cards charge a fee for international transactions (usually 3-5%), but some cards offer lower rates or waive this fee altogether.
- Provide emergency assistance: Some cards offer services like emergency card replacement or cash advances if your card is lost or stolen abroad.
- Allow easy online tracking: Cards with online banking or mobile apps allow you to monitor your spending and stay within your budget while traveling.
Ensure You Have a Low Credit Utilization Ratio
Your credit utilization ratio—the percentage of your credit limit that you use—directly affects your credit score. It’s advisable to keep your credit utilization ratio below 30% of your available credit to maintain good financial health. When you have a low CIBIL score, you are likely to have a smaller credit limit, so you must be particularly mindful of how much you charge to your card.
To manage this effectively during your trip, consider the following:
- Plan your purchases and try to keep your expenses within the available credit limit.
- If necessary, spread your expenses across multiple cards to maintain a low credit utilization ratio.
- Pay your credit card bill promptly to ensure that your available credit is replenished before making further purchases.
Pay Attention to Foreign Currency Conversion Fees
When traveling internationally, credit cards typically charge a foreign currency conversion fee (usually 3-5% of the transaction amount). For those with a low CIBIL score, these fees can quickly add up, affecting your overall travel budget.
To reduce foreign currency conversion fees:
- Use your card primarily in countries where it’s accepted widely, to minimize the frequency of currency conversion.
- Compare foreign transaction fees across different credit cards and select one with the lowest fees.
- Consider using a multi-currency prepaid card or a forex card, which may have lower conversion fees and provide better exchange rates.
Make Timely Payments and Avoid Interest Charges
One of the main advantages of using a credit card for low CIBIL score is that it can help you improve your credit score, provided you use it responsibly. Always pay your bills on time to avoid late fees and interest charges. When traveling abroad, it’s even more important to stay on top of payments, as the cost of interest on unpaid balances can quickly escalate, especially for cards with high-interest rates typically offered to individuals with low CIBIL scores.
Here are some tips for managing payments:
- Set reminders or automate bill payments to ensure you never miss a due date.
- If possible, pay off your balance in full each month to avoid interest charges.
- If paying in full isn’t feasible, make sure to pay at least the minimum payment on time to keep your account in good standing.
Maximize Travel Rewards and Benefits
Although credit cards for low CIBIL scores often offer fewer rewards compared to premium cards, some may still provide travel benefits. Look for cards that offer cashback, rewards points, or other perks like travel insurance or airport lounge access.
Maximizing these benefits can help offset some of the costs of your trip:
- Look for cashback offers on specific international purchases like dining, shopping, or hotel bookings.
- Redeem your rewards points for flight upgrades, hotel stays, or other travel-related expenses.
- Check if your card offers complimentary travel insurance coverage, including medical emergencies or trip cancellation, which can be valuable during international travel.
Use the Card for Emergency Expenses
While you should aim to budget your travel expenses in advance, unforeseen costs may arise during your trip. A credit card for low CIBIL score can be a lifesaver in such situations, allowing you to cover unexpected expenses like medical bills, lost luggage, or emergency flights home.
Before relying on your card for emergencies, ensure that:
- You have enough available credit to cover emergency costs without exceeding your limit.
- You understand the interest rates and repayment terms, as interest can accumulate quickly in emergencies.
- You are aware of any cash advance fees, as withdrawing cash from your credit card can be expensive, especially if it involves international ATMs.
Monitor Your Spending And Currency Exchange Rates
International travel can tempt you to overspend, and it’s easy to lose track of your expenses. Regularly monitoring your spending can help you stay within your budget and avoid surprises on your credit card statement.
- Use a mobile banking app to track your expenses in real-time, so you can adjust your budget accordingly.
- Be mindful of fluctuating exchange rates, as they can impact the amount you’re charged for purchases in foreign currencies. Some credit cards offer competitive exchange rates, so always check before making a transaction.
Conclusion
Using a credit card for low CIBIL score for international travel can be an effective way to manage expenses, especially if you use it strategically. While these cards often come with fewer benefits and higher interest rates, they can still offer a convenient and flexible way to pay for international purchases. By selecting the right card, managing your spending, and paying your bills on time, you can ensure that your credit card helps enhance your travel experience rather than becoming a financial burden. Most importantly, using a credit card responsibly while traveling can also help improve your CIBIL score over time, making it easier to access better credit products in the future. With the right approach, a credit card for low CIBIL score can be a powerful tool to navigate the financial aspects of international travel, allowing you to enjoy your trip without stress.
