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Pros and cons of spending abroad with a prepaid card
Can be safer than cash
Accepted globally
Sometimes the cheapest option
Can help you budget
Some charge fees for using them
Some charge fees for buying them
Some transactions not accepted
No way to borrow money
How do they work?
You can spend on them in other countries and currencies instead of using cash, travellers' cheques or your credit or debit card.
You load money onto it using your debit card, a bank transfer or adding cash in person. When you take it abroad you can:
Withdraw money from cash machines
Spend on the card in businesses like shops and restaurants
You can use it in the same way as a credit or debit card, but you can only spend the money you have already added to your balance. This is because prepaid cards do not let you borrow money.
Here is how to use a prepaid card and how to manage your account.
No, some companies that use preauthorised transactions do not accept prepaid cards.
This includes buying petrol, paying for a hotel or hiring a car, because the final amount you will be charged is not always known when the transaction is authorised.
Here are more examples of when you cannot pay with a prepaid card.
You can use a travel prepaid card anywhere that accepts whichever company processes its transactions: usually Visa or MasterCard. This includes almost every cash machine and business in the UK that accepts card payments. You can also use them online, by phone or to buy through mail order.
What are the advantages?
Normal prepaid cards charge higher fees if you use them abroad. But travel prepaid cards are usually cheaper to use abroad, and some charge no fees on foreign transactions or cash withdrawals.
This makes them cheaper to use than most credit or debit cards.
You do not need to work out exactly how much you will spend before you travel, as you can add more funds to the card if you run out.
They can also be more secure than taking cash because if it is lost or stolen:
Another person would need to know your PIN to use it in a shop or cash machine
You can cancel it as soon as you realise it is missing
You could get the balance on it transferred onto a replacement card
What currencies can you spend in?
There are three types of travel prepaid card:
Sterling cards show your balance in pounds and let you spend in a number of different currencies. They convert your balance to that currency each time you spend or withdraw cash and can be used in several countries.
Single currency cards show your balance in the foreign currency they offer, e.g. euros or dollars. When you add money to the card, it is automatically converted to its currency.
Multi currency cards offer several different currencies and let you hold a separate balance for each of them. For example, you could hold £200, $300, €100 and £0 in the other currencies the card offers.
Before you apply for a card, make sure it lets you spend in the currencies you need.
What exchange rate do you get?
Your card provider sets the exchange rate. They base their rates on the spot rates offered by the company that processes its transactions, Visa or MasterCard.
The best rates on a prepaid card are these spot rates with no extra fees added. But most providers add their own fee on top of this, e.g. 1.5%.
If your card keeps your balance in pounds and lets you spend in multiple currencies, it converts to the new currency each time you spend on the card or withdraw cash. This means the exchange rate usually varies each day you use the card.
If your prepaid card keeps your balance in the currency you want to spend in, like euros or dollars, your exchange rate is set when you load money onto the card.
For example, with a prepaid card that lets you spend in dollars:
You pay on £500
The exchange rate that day is 1.3 dollars to the pound
Your card converts it to $650
If the exchange rate goes up or down before you spend the money on your card, this will not affect your balance: you would still have $650 to spend.
This is when a prepaid card lets you swap your money for the currency you want with someone who wants to transfer their money into pounds sterling.
For example, you could swap your money for euros with someone in Europe who wants to buy pounds.
However, you only need to load money onto your card, and your provider arranges the exchange and lets you know the rate you get.
How to find a travel prepaid card
Look for the right currencies
You can find prepaid cards you can use abroad here. Only apply for a prepaid card if it lets you spend in the currencies and countries you need.
You can also compare:
Check the cost
Prepaid cards come with several fees, including:
A fee for buying the card
An annual or monthly fee for using the card
Fees for adding money onto the card
Cash withdrawal fees
Transaction fees when you make a purchase on your card
Fees for loading money on the card, withdrawing cash or spending abroad can be charged at a flat rate or as a percentage of the amount you are adding or spending.
Work out how much you expect to spend abroad before you travel, including:
How much you expect to take out at cash machines. Decide if this is likely to be in one go or several smaller withdrawals.
How much you expect to spend on your card in shops, restaurants and other businesses.
You can then check how much each card charges for this and choose the cheapest one.
Consider the alternatives
You can also spend abroad using cash, travellers' cheques, a credit card or a debit card. Here is how much they each cost and how to decide which to use.
For all your travel essentials in one place, visit our Travel Hub.
