What is a prepaid travel card?
Key takeaways
Prepaid travel cards can be safer than carrying cash because they can usually be blocked if lost or stolen
You can only spend the money loaded onto the card, making it easier to stick to a budget
Exchange rates, fees and currencies vary considerably between providers
Prepaid cards aren’t protected by the Financial Services Compensation Scheme, although providers must safeguard customer funds
What is a prepaid travel card?
A prepaid travel card is a card you can load with money and use abroad as an alternative to cash or a debit or credit card.
You can use it to pay for goods and services or withdraw cash from an ATM. There may be fees for using the card abroad, or limits on the amount of money you can load onto it.
Unlike a debit card, it isn’t directly linked to your current account. This means if the card is lost or stolen, your main bank account details aren’t exposed.
How do prepaid travel cards work?
Prepaid travel cards work like debit cards, but you load money onto them before spending.
Some cards let you load a foreign currency, such as euros or US dollars, and lock in the exchange rate at that point. Others hold pounds and convert your money into the local currency when you make a purchase or withdrawal.
Many cards can hold several currencies at once, which can be useful for trips covering multiple destinations.
As you spend, the card’s balance falls. Depending on the provider, you may be able to top it up instantly, either online, through an app or by bank transfer.
Prepaid travel cards can make it easier to manage a holiday budget, but they won’t always be the cheapest option. Compare the exchange rate, any markup and the full range of fees before choosing one.
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 |
|---|---|
Can be blocked if lost or stolen, making it safer than carrying large amounts of cash | Fees may apply for issuing, topping up, using or replacing the card |
Helps you control your budget because you can only spend the loaded balance | ATM withdrawal charges and exchange-rate markups can add to the cost |
Some cards let you lock in an exchange rate before travelling | There’s no Section 75 or FSCS protection, although chargeback and safeguarding rules may offer some protection |
Multi-currency cards can be useful for visiting several countries | Some hotels, car-hire companies and petrol stations won’t accept prepaid cards for deposits or pre-authorisation |
What types of prepaid travel cards can I get?
There are a variety of prepaid travel cards to choose from:
Prepaid euro or dollar cards
These can be useful for trips to Eurozone countries, the USA or other destinations where these currencies are accepted. They usually let you load the currency and lock in the exchange rate before travelling.
Multi-currency cards
These cards can hold several currencies at once, making them suitable for travellers visiting more than one country.
Sterling travel cards
These are loaded with pounds and convert your money into the local currency when you spend. The exchange rate is therefore set at the time of the transaction rather than when you load the card.
Who should consider a prepaid travel card?
Prepaid travel cards may be particularly useful for:
Young people: They can help younger travellers manage their spending, although age limits apply and some cards require a parent or guardian.
Travellers with poor credit: There’s usually no credit check because you aren’t borrowing money, but providers will still carry out identity and eligibility checks.
Security-conscious travellers: The card can be blocked if it’s lost or stolen, without exposing your main bank account.
Budget travellers: You can only spend the balance available on the card.
Multi-destination travellers: Some cards allow you to hold and manage several currencies in one place.
However, it’s still sensible to take a backup way to pay such as a debit or credit card, as prepaid cards aren’t accepted everywhere.
Alternatives to prepaid travel cards
Prepaid travel cards might not be right for everyone. Alternatives include:
Travel credit and debit cards
Some specialist travel debit and credit cards offer low, or fee-free overseas spending and competitive exchange rates.
Eligible credit card purchases costing more than £100 and up to £30,000 may also be protected under Section 75 of the Consumer Credit Act. Remember to repay your credit card balance in full to avoid interest.
Travel money
Cash remains useful for small purchases and in places where cards aren’t widely accepted. Compare exchange rates and commission before buying currency, as airport exchange desks can be particularly expensive.
How to choose the best prepaid travel card
When comparing prepaid travel cards, consider:
Exchange rate: Check which rate is used and whether the provider adds a markup
Supported currencies: Make sure the card supports the currencies you need
Fees: Look for charges for applying, topping up, spending, withdrawing cash, inactivity and returning unused funds
Acceptance: Check whether it can be used for hotel deposits, car hire, petrol stations and other pre-authorised payments
Security: Look for app controls that let you freeze the card and receive instant spending notifications
Top-up options: Check how you can add money while abroad and whether limits or fees apply
Card limits: Review maximum balances and daily spending, loading and withdrawal limits
Protection: Check how the provider safeguards your money and whether chargeback is available
Perks: Consider any cashback, rewards or insurance, but weigh their value against the card’s overall cost
What exchange rate will I get on my prepaid card?
The exchange rate depends on the card and the provider. Some let you lock in a rate when you load a foreign currency, while others convert your money when you spend.
Providers may use their own rate or a rate set by the card network and could add a markup. Compare the overall cost rather than relying only on a card being described as “fee-free”.
When a retailer or ATM asks whether you want to pay in pounds or the local currency, choosing the local currency will usually avoid its own conversion rate. Your card provider will then handle the conversion.
What fees and charges apply to prepaid travel cards?
Charges vary between providers and may include:
Application, card-issuance or replacement fees
Top-up or reload fees
Monthly or inactivity fees
Foreign transaction or currency-conversion fees
ATM withdrawal fees, including separate charges from the ATM operator
Charges for closing the card or returning unused money
Author
Rebecca Goodman
Personal Finance & Insurance Expert
Rebecca is an award-winning financial journalist with over a decade of experience writing for print and online media. Her mission is to take the jargon out of personal finance and to help everyone...
Reviewer
Victoria Russell
General Manager - Commercial
Vikki has worked across financial services for over 20 years, and for the last 15 years, created and nurtured a career within MoneySuperMarket Group, leading to her current role as General Manager...
