Prepaid travel cards explained
Buying a prepaid card for your travels saves you from carrying large amounts of cash abroad. Here’s how they work and why they’re a popular choice.
Key takeaways
Prepaid cards offer security advantages over cash
These cards are ideal for sticking to a budget as you can only spend what you’ve loaded onto the card
Prepaid cards lack Financial Services Compensation Scheme coverage
What is a prepaid travel card?
A prepaid travel card is a card you can take on holiday to spend money as an alternative to using cash or a debit or credit card.
They’re preloaded with money, and you can use them abroad to pay for goods and services or withdraw cash at an ATM.
According to Mintel, only 39% of UK travellers rely solely on cash, which means over 60% use some type of card-based option when travelling.
How do prepaid travel cards work?
Prepaid travel cards work like a debit card but they aren’t linked to your bank account - instead, you preload funds onto the card before you travel.
You can then use it abroad for shopping, dining, and withdrawing cash in the local currency, often with better exchange rates and fewer foreign transaction fees than standard bank cards.
To set one up, you simply choose a card, load it with your chosen currency (such as euros, US dollars, or pounds), and lock in the exchange rate.
Many cards also allow you to hold multiple currencies at once, making them ideal for multi-destination trips.
As you spend, the card’s balance decreases, and you can top it up online, through an app, or via bank transfer at any time.
Because you can only use the funds you’ve loaded, prepaid travel cards are a secure way to manage spending abroad and avoid running up unexpected debt or overdraft charges.
What are the pros and cons of using a prepaid travel card?
It’s good to understand the advantages and disadvantages of using a prepaid travel card:
Pros | Cons |
|---|---|
Prepaid cards offer a safe alternative to cash and bank cards | You may need to pay extra fees for things like cash withdrawal or topping up abroad |
They also help you control and manage your budget | You don’t have Section 75 protection on purchases and you aren’t covered by the Financial Services Compensation Scheme |
You can lock in exchange rates to protect yourself from rate drops |
What types of prepaid travel cards can I get?
The UK market offers a variety of prepaid travel cards to suit different needs:
Prepaid Euro or Dollar cards
Ideal for travellers to Eurozone countries or the USA and other countries that accept dollars. They allow you to lock in the euro or dollar exchange rate.
Multi-currency cards
These cards can hold multiple currencies, making them suitable for travellers visiting several countries.
Travel money cards
While these can be loaded with your preferred currency, they may not offer locked in rates as currency-specific cards do.
Who should consider a prepaid travel card?
Prepaid travel cards can work well for anyone, but we think they’re particularly suited for:
Young people: A great way to teach financial responsibility abroad without the risk of debt
Travellers with bad credit: No credit check is required, so anyone can apply
Security-conscious travellers: A safe to carrying large amounts of cash or bank cards
Budget travellers: Helps prevent overspending and keeps your travel expenses in check
Deal seekers: Some cards offer better rates and additional rewards compared to traditional currency exchange methods
Alternatives to prepaid travel cards
Prepaid travel cards might not be for everyone - here are some alternatives you might want to consider:
Travel credit and debit cards
Many providers offer specialist travel debit and credit cards that offer no- or low-fee spending and interbank exchange rates on foreign currency. Travel credit cards also offer Section 75 protection for purchases - just remember to pay back what you owe in full to avoid paying interest.
Travel money
Arguably the most traditional way of taking money abroad is to exchange your cash for foreign currency. It’s better to shop around and do this ahead of your holiday, as last minute money exchanges at the airport can be very expensive - we’d recommend trying a post office or local currency exchange.
Choosing the best-prepaid travel card
When selecting a prepaid travel card, consider the following features:
Exchange rates: Look for cards offering competitive rates to get the most bang for your buck
Correct currency: Opt for a card that caters to the currency of your destination
Low fees: The best cards have minimal fees for transactions, ATM withdrawals, and reloading
Security features: Ensure the card has robust security measures like chip and PIN technology
Perks: Some cards come with additional benefits like travel insurance or cashback rewards
Acceptance: Make sure the card is widely accepted at your destination
Accessibility: Being able to manage your card easily through an app or online is a huge plus
What currencies can I load onto my prepaid travel card?
It depends on the provider, but most prepaid travel cards support major currencies like euros, US dollars, and British pounds. Some multi-currency cards allow you to load and hold multiple currencies at once, making them ideal for trips that cover several destinations.
What exchange rate will I get on my prepaid card?
Many prepaid travel cards let you lock in an exchange rate at the time of loading funds, which can protect you from currency fluctuations. Rates vary by provider and might also include a small markup, so it’s best to compare cards before applying to get the best deal possible.
What fees and charges apply to prepaid travel cards?
Fees will also depend on the provider, but common fees include charges for application or issuance, topping up and monthly maintenance as well as ATM withdrawals and possible margins on the exchange rate.
Author
Mehdi Punjwani
Insurance specialist
Mehdi is a financial writer and editor with over six years of experience in personal finance. He has written for organisations and publications including Equifax, The AA, and USAToday, covering a...
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Collette Shackleton
Content Writer
Collette Shackleton is a highly skilled Content Writer who has over nine years’ experience creating helpful and engaging personal finance content for consumers. Collette shares her experience as a...
