The best prepaid cards for your holiday money

Published:
24 July 2009
Topic:
News,Money,Prepaid Cards

If you're jetting off overseas in the weeks to come and haven't already got yourself one of the leading overseas credit or debit cards then it's probably too late to apply and get your card on time. So with cash providing little security and traveller's cheques proving increasingly difficult to exchange, could it be time to pick up a new form of plastic?

Prepaid cards are growing in popularity - we look at why and highlight some of the leading deals.

How do prepaid cards work?

Prepaid cards work in the same way as a pay-as-you-go phone in that you load cash on to a card and then you can use it just as you would a debit or credit card - and when you run out of cash you simply top-up again. 

They are Visa or MasterCards so you can use them anywhere you could use a credit or debit card.

Most prepaid cards are either dollar or euro cards - your sterling is converted into the relevant currency at the time the card is loaded.

Which prepaid cards are the best for overseas use?

With competition growing in the prepaid card sector, hidden fees and charges are becoming less of an issue but just as is the case with commission-free foreign currency, if you aren't charged upfront you'll pay in another way such as through a less favourable exchange rate.

So if you're shopping around for a card in a hurry it's important to answer the following questions before you apply:

  • Where can you use the card?
  • How do you apply for it? 
  • How quickly can you get the card?
  • What is the exchange rate?
  • Are there any hidden fees?

Here is a comparison of some the leading prepaid card providers:

CaxtonFX

Where can you use the card?

CaxtonFX offers three card options - a Euro Card, a Dollar Card and a Global Traveller Card, the latter of which can be used anywhere in the world.

While your pounds are converted into dollars or euros at the time you load money onto those cards, CaxtonFX's Global Traveller Card works slightly differently: your money is held in sterling and converted into the local currency at the time a transaction is made.

How do you apply for it?

The card is only available online but top-ups can be made online, over the phone or even by text message.

How quickly can you get the card?

Delivery normally takes around seven days.

What is the exchange rate?

Based on last Tuesday's exchange rate (21/07/09) €1,000 would have cost £882.61. With the Dollar Card, $1,000 of spending would cost £620.73.

Are there any hidden fees?

There are no overseas cash withdrawal fees and no purchase fees with any of the cards, but the Global Traveller Card does charge an exchange rate conversion fee that is fixed at 2.50%. 

FairFX

Where can you use the card?

FairFX offers two cards - the FairFX Euro Currency Card and the FairFX Dollar Currency Card. Additional fees apply if you use them outside the Euro zone or the US respectively.

How do you apply for it?

You can apply for the card online. Top-ups are processed online using debit cards, credit cards or direct bank transfers. It is also possible to register for SMS top-ups.

How quickly can you get the card?

Delivery of the card typically takes seven-10 days.

What is the exchange rate?

FairFX offers the best exchange rate of any prepaid card on the market. Based on Tuesday's exchange rate €1,000 would have cost £875.27 - £7 less than CaxtonFX. FairFX's Dollar card also offered a better exchange rate that Caxton - $1,000 would have set you back £611.15.

Are there any hidden fees?

FairFX levies a cash withdrawal fee of €1.50/$2 if you use the card to take cash out of an ATM. There is also an application fee of £9.95 but the card is free if you load £500 or more on to it.

Travelex Cash Passport

Where can you use the card?

The Travelex Cash Passport is available in seven currencies - it can be used in Great Britain, the Euro Zone, USA, Canada, South Africa, Australia and New Zealand.

How do you apply for it?

The card is available online, through Travelex branches and a number of building societies and travel agents. Top-ups can be made over the phone, in participating banks, travel agents or retailers; and you can transfer money via internet or telephone banking.

How quickly can you get the card?

The massive advantage of the card is that as it is available at Travelex branches and a number of travel agents you can get one almost instantly.

What is the exchange rate?

Its exchange rates are not as competitive as FairFX or CaxtonFX - spending €1,000 will set you back £884.56; while spending $1,000 would cost £624.18.

Are there any hidden fees?

There is a $4.50 charge for cash withdrawals in the US and a €3.75 fee in the Euro zone. There is also a £2 monthly charge if the card goes unused for 12 months.

Is there anything else you should be wary of?

Bear in mind that prepaid cards do not offer the same protection as credit cards. Under Section 75 of the 1974 Consumer Credit Act card issuers and retailers take joint responsibility for faulty purchases. If you pay for something with a credit card, in the UK or abroad, valued between £100 and £30,000, that turns out to be faulty or which you do not receive because the company goes bust, you can claim a refund from the card provider. Prepaid cards do not offer the same protection.

They're also not a good place to store large sums of cash as you will not be protected if the provider goes bust.

So should you get a prepaid card?

Prepaid cards are certainly worth considering, although it's still worth taking a bit of cash with you when you go away. Also, if you have a Nationwide debit or credit card, consider using it when you're on holiday as our research found that it was offering a better exchange rate than the prepaid card providers.

Other credit cards which offer good value for overseas use include the Post Office card, Santander Zero card and Saga credit card. For more information of the leading debit or credit cards to use abroad - read our articles 'Are you playing your cards right abroad?' and 'Ten tips to get the best deal on holiday money' or watch our video 'Travel money options'.

Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing. Products underlined can be applied for directly.

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