Guide to Travel Money and Foreign Exchange – 5/6

Guide to Travel Money and Foreign Exchange Prepaid cards are the alternative way to pay abroad, acting as the effective ‘pay as you go’ debit card. The advantages of prepaid cards are numerous so let's take a look at this emerging alternative.

The new plastic power

With a prepaid debit card, the concept is the same as a prepaid gift card, prepaid phone card, etc. You load money on to a card and this can be used at retailers or online merchants. Money can be loaded using cash, a bank transfer or another credit card. You have control over the money on your card and therefore control the amount you can spend so there is no risk of running into debt.

They offer increased safety and if you’re buying online or on the phone and your card is used fraudulently you will be able to get your money back. Furthermore, there is no debt risk as you control the funds you place on the card, and prepaid cards are more accessible – you can get a prepaid card without having to worry about your credit history.

From a travel perspective, there are numerous advantages to prepaid cards. Safety is again a key feature because if you lose your prepaid card, you can contact your provider and they will cancel your lost or stolen card and issue a replacement. Additionally, depending on the provider, you can use a prepaid card worldwide and some providers will even offer 0% foreign exchange fees.

So what’s the downside? Unfortunately, with prepaid cards being a relatively new phenomenon the market isn’t too competitive just yet (though it is expanding). Consequently, there are still a lot of fees to watch out for:

  • Card application fees - There could be a charge for obtaining a prepaid card.
  • ATM withdrawal fees (which are often higher overseas) - Generally you shouldn't need to withdraw cash because it will be pre-loaded on to your card, but if you do you are likely to face charges.
  • Charges for top-ups - Will you be charged on each occasion you top-up - and does this depend on the manner in which you top-up?

Also be wary of bank deposit fees, account termination fees and card renewals although these are less likely to apply to prepaid travel cards. Check to see if the prepaid card company will charge you for sending out a replacement card if your card is lost or stolen.

However, more prepaid cards are emerging which drives these fees down, and, additionally, there are prepaid cards designed specifically for travel which limit overseas costs such as spending overseas, ATM withdrawals, etc. Some cards will include ATM fees as low as £1 for the UK and abroad and others will be completely free in the UK.

It’s also important to consider HOW you can top up. Some prepaid cards will only allow you to top up face-to-face, whereas some give you the chance to top-up face-to-face, on the phone or on the internet.

Again, take a complete look at the market and consider all these factors before opting for the right card for you. Moneysupermarket.com now offers a prepaid card comparison tool, which will compare the best deals instantly.

In part seven the final part of the moneysupermarket.com guide to travel money, we'll consider your travel money checklist.