You can say goodbye to carrying wads of foreign currency when you’re abroad by using a travel prepaid card - we explain how they work.
A travel prepaid card, just like a regular prepaid card, is a card that you top up with money and then use to pay for purchases or to withdraw cash. The difference is that you can load them with the foreign currency of your choosing and then use them overseas.
You can use the prepaid card as you would a debit or credit card wherever it's accepted in shops and restaurants around the world. You can also use it to withdraw cash if you need to while you're abroad.
This means no more carrying around a heavy wallet full of foreign notes and coins – instead all the travel money you need will be safely loaded onto a convenient piece of plastic.
What’s so great about them?
Security and convenience
Carrying a travel prepaid card in your wallet is much safer, more secure, and more convenient than carrying cash. For one thing they are smaller and less conspicuous than notes and coins and so are less open to the risk of pick-pocketing. Plus they’ll be more convenient to you in that they mean your money is all in one place where you can easily access it.
What’s more, if a fraudster does get hold of your card there’s only so much damage they can do – once they’ve depleted the available funds on your card there’s no credit facility to go into and the card is in no way linked to your bank account. Some providers will even offer to refund your lost balance if your card is stolen.
Money management
Loading only a certain amount onto the card means you know exactly how much you can spend, which allows you to budget accurately for your holiday. As these cards come with no credit facility there’s absolutely no risk of you going overboard and spending more than you intended to – once the balance is gone, it’s gone, until you next top up the card.
No credit checks
Another appealing benefit of travel prepaid cards is that you don’t need to go through any credit checks to get your hands on one – because you won’t be using credit, you’ll only be accessing your own money that you have chosen to load onto the card. As such you can get a travel prepaid card without leaving any footprints on your credit record plus you won’t run the risk of being rejected if your credit history is poor.
Accepted (nearly) everywhere
You might be concerned that your prepaid card is not going to be as universally accepted as your credit or debit card might. However, most travel prepaid cards are now backed by Visa or MasterCard – meaning they will be accepted in the wide majority of global retailers, merchants, cash machines and restaurants.
It’s worth mentioning too that if you pick a card with low costs, you can save on spending abroad compared to using a credit or debit card. This is because the majority of credit and debit cards will charge you an international conversion rate of 2.99% on any purchase or cash withdrawal you make while abroad, while this won’t apply to a travel prepaid card.
What are their drawbacks?
The main downside to using a travel prepaid card is that they don’t come free – it's likely there will be a number of charges that you’ll need to be aware of, which is why you’ll need to shop around for a card that offers you value for your money.
There may be a set-up fee when you first get your card, exactly how much will depend on the provider.
Additionally there may be a fee for topping up your card with currency, a fee for withdrawing cash at a cash machine, and a fee for using your card to make a purchase. Some providers may also impose a service charge either on a monthly or annual basis for the ongoing use of your card, and there may be a charge for inactivity on your card or for cancelling your card.
If you're not careful these charges can mount up and mean that using a travel prepaid card ends up being more expensive than simply carrying cash, which is why it's so important to check out the charges before you jet off .
You should also be aware that some transactions that need to be ‘pre-authorised’ cannot be made on a travel prepaid card. These are transactions where the end amount is unknown and so your card is used as security that you will be able to pay at the conclusion of the transaction – for example by using your card as a tab at the bar, or by giving your card details at the beginning of your hotel stay for possible charges incurred during your stay. This can limit a travel prepaid card’s uses abroad and as such it is worth still carrying a credit or debit card with you as well.
What else do I need to know?
Before you jet off abroad it’s worth finding out exactly how much you will have to pay to top up your card if you need to do so while you’re away. You should also find out how you can top up your card – for example, you may be able to do it online or over the phone, or you might have to visit a special Paypoint in order to do this.
It’s also worth checking the maximum daily withdrawal allowed on your card as well as the minimum and maximum load amounts, i.e. how little or how much foreign currency at a time you are allowed to load on to your card.
If you think carefully about how and where you plan to spend on your card, and what you will principally use it for – whether that’s purchases or cash withdrawals – you should be able to choose a card that won’t cost too much to use.
