How do you usually get your holiday cash? Take a trip to your bank or the Post Office a couple of weeks before you travel? Have a last minute dash to the airport bureau de change? Or do you whack all your foreign spending on a credit or debit card?
All of the above are tried and tested ways of spending while on holiday, but they all have their downsides; you’ll have to pay commision to your bank or the Post Office (commission-free is usually anything but), while getting it at the airport means you’ll get a terrible exchange rate (this is THE worst way to get your travel cash).
And if you take a big wad of cash then there’s always the risk of having it stolen while you’re travelling and the added headache of stashing it away when you reach your destination.
Putting it on plastic will eliminate this problem, but means while you’ll be hit with all sorts of additional charges on top of any interest you might incur even when using a debit card. Unless, that is, you use a prepaid travel card.
What is a prepaid travel card?
A Visa Prepaid Cardlooks like, and can be used like, any credit or debit card – it will have a long card number, valid to and from dates, a signature strip and will come with a chip and pin code. However, unlike a credit cards, a prepaid card must be loaded with cash before it can be used, meaning that you can only spend what’s on the card and so there’s no chance of running up debt.
In addition, these cards also often come with great incentives for travellers, for instance the ICE Travellers cashcard offers free cash withdrawals from any ATM and there are no fees for using it abroad. Or if you go for the T24 Black Prepaid Visa then you’ll get free travel insurance on your flight tickets (provided you book using the card) and also get a free priority pass to 600 airport lounges in over 100 countries.
But like most things, these prepaid cards have their advantages and disadvantages, so let’s take a closer look…
Prepaid cards – the pros…
The main advantage of using a prepaid card for your travel money is that you’ll not have to carry around significant sums of money while you’re away, and if your card is stolen then you only stand to lose the amount on your card and thieves will not be able to go on a massive spending spree at your expense, maxing out your credit card or clearing your bank account.
When you’re abroad, prepaid cards are also often cheaper to use than debit or credit cards, which will often charge a fee of around 3% when you spend abroad. This also applies when withdrawing cash on your card and you may also be hit with a cash transaction charge and interest will be charged on credit card purchases from the second you take out your cash.
Pick the right prepaid card, though, and you can do away with all of those fees.
If you like to keep an eye on the exchange rate then another plus point of prepaid is that you can load up with cash when the exchange rate is favourable and you won’t lose out if the rate worsens.
Furthermore, because you can only spend what you load up, a prepaid card is a great way of setting, and sticking to, a holiday budget.
…and the cons
Not all prepaid cards are created equal – if you don’t do your homework and make sure you pick up the correct card you could find yourself hit with an application fee, a monthly fee, a loading fee every time you top up and even an ‘inactivity’ fee when you don’t use your card!
Overall, though, the pros far outweigh the cons and a prepaid card is well worth considering if you’re travelling abroad any time soon.