Pre-paid Travel Cards
A Great Way to Spend Money Worldwide
Pre-paid travel cards are like the modern version of travellers cheques. Once loaded with cash, you can use a travel card just like you would a a debit card. Pre-paid travel cards are a great option, not only can you set yourself a budget, you can also use them to lock in a great exchange rate.
Why use a pre-paid card instead of my own bank?
Using a UK bank debit card to take money out overseas can be very expensive. You are unlikely to get the best exchange rate, but in addition to these things banks can also add other ‘hidden’ charges:
- Non-sterling transactions fees, in addition to the exchange rate, usually at around 3%
- ATM cash withdrawal fees
- Some banks will charge a penalty each time you spend on your card
A prepaid travel card is a safer option than carrying round a load of cash – if you lose your card, you can cancel it, and request a new one – this can cost up to £10 depending on provider, but it is better than losing a wallet-full of cash!
Parents of gap year students are usually huge fans of prepaid travel cards, as it gives them a way to top-up funds from far away – and also set a budget for their kids travel arrangements, especially if the card comes with a spending limit!
Things to look out for
- Exchange Rates – most pre-paid travel card providers set their own exchange rates, usually adding 1-2.5% as an exchange fee. That being said, it can more cost effective to accept this fee than to use your UK debit card for overseas transactions. With fluctuating exchange rates, when you buy on a prepaid card you lock in the rate when it’s good, if you’re tracking currency fluctuations, you can optimise and buy currency for your pre-paid travelcard when the pound is strong. With debit cards you get the exchange rate on the day you purchase, if the pound is strong that day you’ll be quids-in, but make purchases when the pound is weak and you’ll be losing out.
- Fees – Just like UK bank debit cards, prepaid travel cards can be loaded with fees. Check out the terms and conditions before you sign up for something. Some things to look out for include:
- Application & replacement fees – applying for a card can cost up to £10, as can a replacement card if you lose it. Some providers set the expiry date as little as one year, and you could find you have to pay a fee to continue using the money on your card after the expiry date.
- Transaction fees – Like debit cards, prepaid cards can charge you to use ATMs or charge per transaction.
- Inactivity charges – usually these come in after 12 months, but if you haven’t used your card in a while the provided could charge a couple of pounds per month for lack of use.
- Refunding fees – Most providers will charge a fee or set low exchange rates to refund money back from your card. It is best to get too excited by great exchange rates and not overload your card with more money than you are likely to use.
- Loading & Transaction Limits – Get a card to suit your needs. Some cards have a loading limit, which means it won’t hold more than X amount of money. Transaction limits can be as little as £50 per day for some card providers – this may cause you a headache if you need to make a big transaction, however it is useful for those frivolous spenders or for parents who want to make sure their kids are keeping their spending in check!
- Is Your Money Safe – Choose a card that is backed by a bank or building society, this way, when you put money onto it, your cash is in what’s called a ‘ring-fenced account’. All this means is that your money is in a different account from the prepaid card providers account, so if the company goes bust, the bank or building society still hold your money.
- Spending Exceptions – Prepaid travel cards are almost always advertised as ‘accepted anywhere you see the VISA or Mastercard symbol’, whilst this is largely true, you are unlikely to be able to hire a car using one of these cards. Some users also raise an issue of them being accepted at toll booths and at petrol stations, this is something to bear in mind if you are wanting to travel lots and use your card.
This is not a list of all pre-paid travelcard providers, and we recommend that you do your research and find the right card for you.