Using prepaid cards on holiday

Key takeaways

• Prepaid cards allow you to buy things and withdraw cash in various currencies without overdraft risks.

• They can help with budgeting, as they don’t incur interest charges and you can only spend the money loaded onto the card.

• You can choose from single or multi-currency cards, depending on where you’re travelling.

What are prepaid cards?

Prepaid cards work just like debit cards but instead of spending money from your bank account, you can only spend money you have pre-loaded onto the card.

This means you can make purchases across a range of currencies without the fear of dipping into an overdraft and getting into debt. There’s also no interest charges as you may get with credit cards if you don’t clear the monthly balance.

They’re quick to set up and use and you can top-up the card instantly if you need to, although they can come with a variety of fees.

Why are prepaid cards popular for overseas spending?

Prepaid cards are becoming more popular as they’re an easy way to spend when you’re abroad.

Unlike traditional travel credit cards, prepaid cards don't incur interest charges, and you can’t get into debt as you can only spend the money you’ve loaded onto the card.

They're also safer than cash as your money can be recovered if the card is lost. Some cards also allow you to fix in the money exchange rate at the time of loading – not during purchase.

What’s the rightprepaid card for me?

When it comes to prepaid cards, you have options. The single-currency prepaid card is your go-to if you're visiting one country or several that share the same currency. On the other hand, if your travels take you through multiple countries with different currencies, a multi-currency prepaid card is your best bet.

Advantages of using prepaid cards

Prepaid cards are not just about convenience; they come with a host of advantages:

• Budget-friendly: They are handy for budgeting as you can only spend the money on the card.

• No credit checks: Obtaining a prepaid card doesn't require a credit check, making it accessible for everyone.

• Widely accepted: Most retailers accept them, but always take a back-up payment option.

• Safer than cash: If the card goes missing or is stolen you can freeze it instantly, via the app or online.

• Fixed exchange rates: You can often choose to lock in your exchange rate at the time of loading funds, instead of when you use the card for purchases or withdrawals.

Are there any disadvantages to using prepaid cards?

Despite their benefits, some prepaid cards come with some drawbacks too, such as:

• Extra fees to pay: There may be fees to pay when you apply for a card, use it abroad, top it up, use it for cash withdrawals, or for inactivity.

• Not accepted everywhere: Although prepaid cards are widely accepted, not everywhere takes them so always take another payment option with you.

• Extra benefits: You might be better off with a travel credit or debit card as these often offer extra perks.

Who should opt for a prepaid card?

Prepaid cards are ideal for travellers on a budget who need to control and monitor their spending closely. They're also a good alternative for those who cannot get a credit card or are dealing with a negative credit score. Plus, they offer flexibility and security for travellers, ensuring that a lost card doesn't equate to lost funds. Travellers looking for flexibility will find that prepaid cards are easy to top-up and safer to travel with compared to cash.

How to compare prepaid cards

Make the most of your travel money by getting competitive deals on a prepaid cards with the MoneySuperMarket comparison tool. We’ll give you a way to compare monthly fees, transaction fees, and any benefits that are worth knowing about. You can also compare exchange rates to find the best euro rate or any other foreign exchange rate that may be relevant to you. Head to our currency comparison and compare travel money today.