A Guide on Prepaid Travel Cards or Currency Cards

A Guide on Prepaid Travel Cards

Prepaid travel cards or currency cards are ideal in helping you secure holiday money for your travel abroad. However, you must know both its benefits and downsides and compare them with the alternatives to spend overseas.

What are prepaid travel cards ?

Prepaid travel cards are also known as currency cards or international prepaid cards. It allows you to load money on your card and take it on your trip overseas to spend. This can be ideal for someone who does not prefer taking cash.

Currency cards differ with credit cards, so there no need to think about overdrafts and debt. It only allows you to spend the money you have available on the card.

You can use them in shops, bars, restaurants, petrol stations and anywhere you might normally use a credit card. And you can use the prepaid card to withdraw money at any ATM.

Benefits of a prepaid euro card or dollar card

Currency cards or prepaid travel cards are safer to use than cash. Even if you lost your card, your money is safe, and your provider can cancel it. You can also get an easy replacement for the lost card.

In terms of budgeting, prepaid cards can help you avoid debt as you only get to spend the money you have available.

It also allows you to know how much money you’ll get from the outset. Besides, it can sometimes be the cheapest option to spend money abroad. In fact, it’s widely accepted around the globe.

Downsides of currency cards abroad

There can be downsides in using these cards. This is the main reason why you have to find the best-prepaid travel card. Besides, some of which can hold several charges, so make sure to check yours carefully. These fees can include:

• Possible fees when you take out the card
• Charges for loading money
• Withdrawal fees
• fees for spending
• Monthly fees
• Charges for not using the card by any means

Remember, prepaid travel cards are not credit cards. This means, they’re not regulated under the Consumer Credit Act 1974. They are not also protected under the Financial Services Compensation Scheme.

Additionally, you might not be able to use them anywhere you want or borrow certain money just like your credit card. However, it has tons of benefits as well.

Choosing a Currency Card

When finding for international prepaid cards, you have to check the one that holds that currency that you need. Then sort out which among the options offers the best deal.

To learn more, read our guide on how prepaid card works abroad.

Currencies of Currency Cards

Single Currency Cards

These currency cards allow you to preload one currency. An example would be getting a prepaid euro card or a prepaid dollar card. This will depend on your holiday destination or the country to visit.

Multi-currency Pre-loaded Travel Cards

These kinds of currency cards can hold different currencies. This is ideal if you plan to visit different countries. Get more details by reading our guide on how single and multiple pre-loaded travel cards work.

Comparing Prepaid Travel Card

If you need further details about prepaid travel cards, we’ve made a complete guide that highlights the important information regarding currency cards. Read our guide and compare prepaid travel cards HERE.

The Basics Of Travel Money

The Basics Of Travel Money

It can be easy to budget your travel money when you understand which currency to use and how you can get the best exchange deal. This guide will help give you the basics that you need to know about travel money.

What is travel money?

Travel money is the currency you use to pay for services or products overseas instead of your pound sterling.

The currency you need

The currency that you need will depend on your country of destination. Some countries share their currency with other nations while most have their own.

Countries like Mexico also use other currencies unofficially where US Dollar is oftentimes acknowledged along with Mexican Peso.

You can also check our guide on: Compare Euro Exchange Rates

What is Exchange Rate?

Exchange rate shows you how much foreign money you’ll get when converting your existing currency.

For instance, if pound sterling to the euro exchange rate is 1.37, you’ll get 1.37 euro for every pound you exchange. This rate can vary from one company to the other. So, it would benefit you if you compare holiday travel money exchange rates. This can help you get the most out of your travel money.

Additionally, some travel money providers will offer a good rate when buying a large amount of foreign currency. This can be a huge difference when exchanging a lump sum of money.

Read our guide on how you can get the best deal on travel money.

How much travel money you need to take?

The amount of travel money that you need to rake will depend on your itinerary and duration of stay.

You can set a budget on how much will it costs you and set aside an additional 10% budget for emergencies. You can consider budgeting for the following expenses:

Food and drinks

Travel between cities

Activities, events, entertainment, shopping

Accommodation

Emergency costs

You have to make a list of the possible expenses and anticipate possible costs that may occur while you’re abroad.

How much travel money you can buy at once?

The amount of foreign currency that you can buy depends on the provider since each company has its own standard on how much you can order.

Though you might not plan to take a lump sum of money on your trip overseas, you must be cautious on cash restrictions when taking money outside or back to the UK.

For instance, taking more than a sum corresponding to €10,000 from the UK to a non-EU country should be declared to customs. Otherwise, you’re money will be at risks of being confiscated. You can find out more details by visiting the Gov.UK website.

Where can I buy travel money?

Online

You can search online for travel money providers that lets you order currency and deliver it right to your doorstep.

Bureau de change

You can also go to high street travel money companies or at the airport to exchange your pound sterling into your preferred foreign currency.

Abroad

Through your debit or credit card, you can withdraw money abroad at the ATMs. These can be costly as it carried charges for foreign usage.

Travel Money Card

You can also secure prepaid travel cards online or in-store. Simply load the card with pounds sterling and withdraw foreign currency when you’re overseas. You must also check with your provider if your prepaid travel cards suit the type of currency that you need.

Buying travel money at the airport?

Buying foreign currency at the airport can be pricey. It can cost as much as buying it from the high street or can even be more expensive.

If the only option left is buying it from the airport, you might consider buying it online through preorder to get a good deal and picking it up in the airport.

How much money to take on your overseas travel?

How much money do you need to take on your trip?

One of the common questions that come in mind when taking a trip is how much money to take overseas. Well, it can cost lesser than you might imagine.

Plus, several factors can influence the amount of money to take abroad…which countries to go, the accommodations you’d like, how frequent you travel between cities, the manner of transportation, and the activities or events that you plan to do.

In this guide, we will give you an idea of how much money should you take on your trip, what to budget for and the costs at stake.

The Amount Of Money to Take Abroad

Before getting on board for your holiday travel, you must have considered the costs that you need to budget. These can help you avoid running out of money while overseas and the hassle of dealing with leftover. These can include:

Accommodation

Your accommodation costs can differ depending on the type of accommodation you prefer and where you’d like to stay. Though affordable hotels and accommodation can be a great way to save costs, you may need to budget based on the accommodation you choose.

Food and drink

You have to consider budgeting for three meals a day and consider whether you prefer to dine out or cook your meals. Food can also take huge slice on your budget, so making sure you have the costs covered.

Transport money to spend abroad

Travelling between cities can take up much of your holiday money. You can end up ripping your budget unless when you have included this factor in your budget beforehand.

You can do your homework and find out the public transport at each destination. It’s also ideal to determine the best possible way on how you can save travelling from one route to the other between cities and points.

Activities and entertainment to spend

You can do some research and make your itinerary for activities that you want to try or events that you wish to attend.

Making a list of your activities and setting a budget to spend abroad could help you stick to the amount to spend overseas. Attending events or considering entertainment as part of your travel budget can give you a more meaningful experience.

Emergency costs and money to take overseas

When making a budget for travel abroad, you also have to consider setting aside for unexpected costs. You’ll never know if you find some interesting buys overseas that you badly need. Anticipating these costs should also be counted on your budget.

You can save an additional 10% on your budget or work overseas when you can to get extra cash.

Saving an extra 10%

When you already calculated the costs that you need or your trip, we suggest adding 10% on your budget. This can give you breathing space so as not to run out of foreign money while overseas. It can be used for leisure or for emergencies and other unexpected costs.

Additionally, you can save some amount to spend overseas by checking our guide on the best way to spend overseas. This guide shows you which account would suit you best.

Work Abroad for Extra Cash

If you’re going for a long-term trip, it might be possible to get some part-time job that could help you earn extra cash. This can boost your finances while abroad while still having adequate time to enjoy the places you wish to visit.

Though you won’t be earning a lot from working part-time, any money that can be added on your budget can make a huge leap.

You can check for internships abroad and contact exchange companies to find a job. There are sites that can also help you get details about exchange packages or volunteering schemes around the globe.

Are there additional costs to spend abroad?

Aside from the points mentioned in this guide, there are normally no other expenses. However, some countries may have charges for visa or entry fee before you can get in. These charges may change regularly but can approximately costs around £100 or more. You must try to find out the details and plan ahead of time.

To be eligible for some visas, you have to provide proof that implies you have enough money on your bank account to cover the costs and amount to spend abroad.


Compare Travel Products

Comparing more travel deals increases your chances of finding the best one for you. These could include cover for medical bills, travel insurance covers, delays lost items thefts and a lot more. Get more details about your travel HERE.

Guide in Getting the Best Deal on Travel Money

Getting the Best Deal on Travel Money Exchange Rate

If you get the best deal on travel money, it could mean getting the best buy back for your pound sterling. Learn more as we guide you on how to get the best deal in terms of holiday travel money exchange rate.

Defining a Good Deal

A good deal could mean low charges on delivery fees and other costs. Furthermore, you can compare foreign currencies online and in-store when finding for the best deal on travel money.

Taking travel money abroad is not the sole means to spend money overseas. We suggest that you explore alternatives before going on a trip.

The Costs Associated with Travel Money

Exchange Rate

Exchange rate implies the amount of foreign currency you can get in converting your money.

Travel money providers buy foreign currency at a wholesale price. This allows them to gain profit in selling the currency. This is the reason why the exchange rate differs from one provider to the other.

When checking for the best deals, the higher the number you see, means the bigger travel money you can get.

Commission Charge

A commission charge is a fee by providers for handling and administering your order. Usually, the rate includes this fee. Though it implies 0% commission fee, the rate can be less competitive. This is because it includes this particular charge.

Delivery Cost

Certain delivery charge may be included when buying your travel money online or via phone. This charge may differ as some companies offer free delivery to your home or pick up points such as in the store or airport.

Credit Card Charges

When using your credit card to buy for foreign currency, the transaction is treated as a cash withdrawal. This entails charges on daily interest and cash advance fee.

Additionally, the travel money company can also charge you for each transaction that is approximately up to 3%.

How to Buy Travel Money

You must be aware of the pros and cons of buying travel money online or in the store.

Online

Pros

You’ll have better chances of getting better rates.

It gives wide ranges of available currencies.

You’ll have more options for you to choose from.

Cons

You may need to wait for the delivery of your travel money.

It comes with delivery charges.

The chances of getting lost in the post are likely to occur.

In Store

Pros

It’s easily accessible on the high street.

You don’t have to wait for the delivery, meaning you can get it right away.

You won’t have to pay for delivery charges.

Cons

You’ll have fewer options to choose from.

There would be limited stock available.

It consumes most of your time to compare rates.

Can I buy in advance?

The process of buying in advance is a way of pre-ordering. You can order travel money in advance if you prefer to picking it in the store to avoid delivery charges. And, you’ll need enough time for the delivery to arrive.

Planning ahead of time allows you to scrutinize the costs and the pros and cons of buying holiday money. This can help you weigh your choices in terms of online cash orders or travel money cards.

However, if you don’t have much time for this, you can read our guide on: Ways to Spend Overseas: Sorting Out Last-Minute Options.

Useful Tips to Get the Best Deal

1) Focusing on the total cost and not just the exchange rate can help you calculate how much it will cost along with the other charges.

2) Avoid using your credit card to shun excessive charges; you can use your debit card or swap your available cash into your preferred foreign currency. This means your debit cards enable you to save you more.

3) You have to check the offered rates because companies offering 0% commission fee can be tricky.

4) It’s always best to plan advance and shop around for cheapest deals before taking a trip. This way, you can compare deals and save on the delivery costs. It helps you chose the best deal on foreign currency exchange rate. Finding a good deal can help you minimize expenses.

Spend the faulty way overseas and you could be losing ££s each time you shop. It’s not just getting the best options to spend – it’s also about understanding the methods of getting a good deal. The key is getting the best rate at the time.

Things to Remember

Firstly, if you withdraw cash on a credit card, it’s posted on your credit file. This is not certainly bad, but if you need a holiday loan or apply for credit in the future, this can make it difficult for you.

Secondly, the new lender might view it as a hint that you’ve no cash in your current account and that you’re so desperate for cash, you’re ready to pay high interest to get it.

In conclusion, no one knows if the pound will be greater or weaker in the future. Anyone who advises you contrarily is solely speculating. While the pound has climbed in recent weeks, with continuing uncertainty there’s no means to distinguish if this will persist.

Travel Money: Dealing with leftover foreign currency?

Travel Money: How to deal with my leftover currency?

Depending on how you budgeted and organised your travel costs or holiday travel, you can be stuck with a few measly coins and a folded up note or a pile of foreign money.

The good news is there are ways on how you can avoid the feeling of being exhausted on what to do with your unspent currency. Here is how you can make use of any unspent foreign bill.

What to do with my leftover travel money?

There’s no need to be exhausted in thinking of what you can do with your leftover currency. If you plan of visiting a country that accepts your leftover currency, you can keep it for your next trip. Just keep it safe so you can access it easily the next time you need it.

You can also find a high street travel money provider and exchange it back into pound sterling.

Should you prefer to give it away, you can give it to your friends or family who will take a trip to a country that accepts your leftover foreign currency. You can also donate them to your preferred charity.

Exchanging your currency back

You can convert the leftover currency back if you don’t have plans to visit or take a trip in the near future.

However, if you see that the exchange rate is lower, the tendency of getting back lesser money is likely to happen. If this happens, you might get hold of it and try to exchange it later when the rate is better.

Moreover waiting to exchange the money for the rates to go up could take much longer as it would likely go down drastically. Besides, most providers are likely to convert foreign notes rather than coins.

What is buy back?

Buy back allows you to swap unused foreign money back into a pound sterling after your travel.

The same with buying foreign currency, you’ll be offered with an exchange rate. This means you can either get more or less in terms of offers.

Guaranteed buy back

Guaranteed buy back allows you to sell your foreign currency at the same rate during your first exchanged. This process is not for free, it will cost you up to £4 for a guaranteed buy back.

If the rates increased the time you want to exchange your foreign money, you can look for deals that help you save more than having a guaranteed buy back.

Keep it for next trip

If you have plans to visit the same country or take another trip to a country that accepts your leftover currency, you can keep the foreign currency instead. By means of keeping it for your next trip, you can avoid paying for exchange fees and other charges.

Should you need to exchange your leftover currency, make sure to find for the best deals.

Selling to friends or family

Giving away your left over currency to family or friends means not getting any money back out of it. Instead, you can try the following options:

1. Exchanging any left over travel money from each other’s trips overseas as a standing deal that can both help you avoid the exchange costs.

2. Selling your money to friends or family that helps you avoid costs when using a company.

Donating it to charity

You can also donate your leftover holiday travel money to a particular charity that accepts the foreign currency.

Another option is giving it to airlines that accept foreign coin donations during return flights to the UK. Some of which are in airports collection points.

Tips for your next trip

It can save you time and any hassle if you can avoid having any leftover foreign currency. If you can use cash, make sure that you stick to your budget and take a bit more just in case you tend to overspend.

When using your card, you have to inform your provider that you’ll be using your card abroad to avoid restrictions on your card and the possibility of being blocked.

For further details, read our guide on the best way to spend abroad before you take a holiday trip.

The Best Way to Spend Abroad

The Best Way to Spend Abroad

You might end up spending what you can’t afford when spending abroad; so, you must determine the option that can give you the cheapest deals on your trip. Being prepared and carefully planning your travel can help you make the most out of your travel money. We suggest that you check your travel money and find the best the best deals before going on a trip.

How can you spend abroad?

The following are the options on how you can spend abroad

Cash – you can consider foreign currency as travel money but you have to create a budget and stick to it. Failure to do so could end up falling short on your money abroad. Also, you must find the most affordable deals that you can get before going on your holiday.

Credit or debit card – You can take your existing credit or debit card overseas yet you have to check on the charges for foreign usage. Besides, you have to inform your bank of the possibility of getting blocked.

Prepaid card – You can load cash on these cards and use it in stores abroad or withdraw from the ATMs. These allow you to spend the money you have available on the card.

Travellers cheques – These can be exchanged into foreign currency in particular areas abroad. Thus, it needs your signature and proof of identity when converting it into foreign currency.

Taking Cash Overseas

Taking cash abroad is the fastest and easiest way to spend when getting into your holiday travel. However, you must take note of both its advantages and disadvantages.

Advantages

can be used wherever and whenever

easy to handle or manage

no costs in terms of foreign usage

Disadvantages

can be stolen, misplaced or easily lost

notes of high value can be rejected

costly when exchange to foreign currency

Read our guide on how you can get the best deals on travel money to find out more.

Credit or Debit Cards

Almost all credit and debit cards providers require charges for each transaction abroad. So, you can try looking for a credit or debit card that trims the expenses of your spending overseas.

Debit Card

Pros

maybe free to use abroad

you can easily cancel it when lost or stolen

safe and secured with chip and pin

Cons

may carry charges for using overseas

can be blocked by the provider

may unintentionally get overdrawn

Credit Card

Pros

allows you to pay for your bills later

maybe free when used overseas

Protected under section 75

Cons

costly in terms of cash withdrawals

you might go beyond your credit limit

can be blocked by the provider

Check to Compare Credit Card Deals

How much does it cost to use Debit or Credit Card in spending abroad?

The costs of using either credit or debit card abroad differ depending on the type of card you have.

Some of the usual fees that you can get when using debit or credit card are as follows:

Card Transaction fee – 0% – 2.99% for credits and debit cards

Cash withdrawal fee – 0% – 2.75% for debit cards while 0% – 5% for credit cards

Cash withdrawal interest – this is not applicable for debit cards, but credit cards usually cost approximately 6.5% – 69.9%.

Costs Breakdown for Debit or Credit Card to Spend Abroad

Debit Card Costs

This example explains the possible debit card costs.

Exchange rate = 0.73

Card transaction fee = 2.99%

Cash withdrawal fee = 2.75%

Debit card Conversion (€250) Charge Overall cost
Card transaction fee (2.99%) £182.50 £5.46 £187.96
Cash withdrawal fee (2.75%) £182.50 £5.02 £187.52
Total £365.00 £10.48 £375.48

With the figures above, the two transactions overseas can cost you as much as £10.48. This can still be reduced when you get a debit card that offers an affordable or non existent charge for foreign usage.

Credit Card Costs

This example explains the possible credit card costs.

Exchange rate = 0.73

Card transaction fee = 2.99%

Cash withdrawal fee = 5%

Credit card Conversion (€250) Charge Overall cost
Card transaction fee (2.99%) £182.50 £5.46 £187.96
Cash withdrawal fee(5%) £182.50 £9.13 £191.63
Total £365.00 £14.59 £379.59

With the figures above, the two transactions overseas can cost you as much as £14.59. You can avoid this charges when you get a credit card that does not charge for foreign usage. Once you do you can save approximately £5.46.

Daily Interest on a Credit Card

On top of your cash withdrawal fee, you have to pay for the interest of the cash you withdraw through your credit card.

This is one of the reasons why you have to avoid using a credit card overseas if you are to withdraw cash. As a result, you can end up getting excessive charges.

Using a Prepaid Card

You can use a prepaid card as an alternative way to spend abroad other than your credit card. You just have to load it with funds that you can use in spending rather than spending money and paying it off later.

The two types of prepaid card are:

Standard prepaid cards are designed to be utilised in the UK bit can also be used in spending abroad for card transactions such as cash withdrawal. When using these prepaid cards, you will be charged on the exchange rate every time you used it overseas.

Travel prepaid cards are also known as currency cards, which are loaded with a foreign currency instead of sterling. This means you’ll be charged a for a single exchanged rate at the point of loading it with funds rather than each time you use it.

Advantages

You can use it around the globe

Cheaper to use abroad

Top up how much you’d like to spend

Disadvantages

You can only spend what money you have on the card

Sometimes charges for loading the card

Possible charges or costs when applying

Check for travel prepaid cards that you can use abroad here.

How much it costs for prepaid cards when used abroad?

Some prepaid cards come with several potential fees such as cards fee, load fees, card transaction fee, and card withdrawal fee.

The card fee for a standard prepaid card is between £0 – £15 and £0 – £50 for a travel prepaid card.

Load fees for standard prepaid card is around 0% – 5% while 0% – 2.85% for a travel prepaid card.

In terms of transaction fee, standard prepaid card will costs 0% – 5.75% while 0% – 5.75% for travel prepaid card.

Furthermore, the cash withdrawal fee for a standard prepaid card is around 0% – 5.75% while 0% – 5.75% for a travel prepaid card.

If you use a cash machine with a prepaid card, you might get further fees and limit in terms of withdrawal.

Travellers Cheques

Your travellers cheque works by converting your sterling into foreign currency in the form of a cheque. You can turn this cheques into cash overseas

When buying a travellers cheques, be cautious with the unnecessary charges. For instance, you’ll get charges when you used your credit card in buying travellers cheques. This means you’ll get charges for both credit card and traverllers cheques.

Advantages

It’s a secure way of taking money overseas.

You can easily cancel it when lost or stolen.

If you need a replacement, you can get it within 24 hours.

Disadvantages

You cannot exchange travellers cheques.

You won’t have any access to cash in case you lost it.

It can be used when stolen and not signed.

If you prefer to use travellers cheques to spend abroad, we suggests you sign them to prevent the risks of having someone used it fraudulently. It is provided by several travel money companies in connection with American Express. So, in case you need to cash in travellers cheques, you may need to look for an American Express kiosk.

Ways to Spend Overseas: Sorting Out Last-Minute Options

Ways to Spend Overseas: Sorting Out Last-Minute Options

Going on a trip without any idea on how you can spend abroad seems like a distant dream. However, this can become a reality when you carefully plan things. In fact, there are tons of ways on how you can spend abroad. Travel does not have to be costly. Having the right budget and the suitable options on how you can spend abroad could make it a reality even if you’re not earning a lot.

Options to Spend Abroad

There are several means of how you can spend abroad. Some of which may take a while to sort out than other options. These are:

Cash – If you travel the next day, week or month, it’s possible to secure cash before your trip.

Traveller’s cheques – You can get it before your next day or next month’s trip, or possible to secure it on the next day.

Prepaid Card – It’s not guarantee to secure a prepaid card if you are to travel the next day. However, you can get it before your next week or next month’s trip.

Debit Card/Credit Card – If you’re going on a trip the next day, it would not be possible to get a debit or credit card instantly. It can be possible to secure one after a week, but not a guarantee. However, getting it a month before your trip is feasible.

Additionally, if you have to wait for any of the options listed to be delivered, there could be delays due to postal services. This means you have to have a backup plan or alternative in case of delays.

Using Cash to Spend Abroad

There are tons of ways you can buy foreign currency. Since it’s broadly accessible it would be easier and faster for you to secure travel money for your trip abroad. You can either find a high street travel money provider and pick up the foreign currency right away; or, order foreign currency online and have it delivered to your home or the closest branch on the next day.

Furthermore, currencies that are not commonly used may have to be ordered unlike popular currencies such as Euro and US dollars.

Following are some tips that you need to consider to ensure getting your travel money before your trip.

Research the currency that you need and find out which is easier to get it. Whether getting it online or on high street would be more feasible so as not to compromise your travel schedule.

Make sure to contact the travel money provider if a particular currency is not advertised. You can ask them if they can order it for you to save more of your time when possible.

If you don’t have enough time, you can still secure travel money from online providers, and check whether it’s possible to pick it up at the airport or before your trip.

Most providers allow you to pick up your currency from 1 PM the next day. However, you must contact them to ensure and scrutinize the terms and conditions of your purchase. For further details you can check our guide on how to get the best travel money deals.

Using a Traveller’s Cheque

Traveller’s cheque is widely used in the past. Today, you can longer go to stores and buy one as they are phased out. However, you can still secure one online and have them delivered to your home or pick them in the store. Most of the travel money providers allow pick up of traveller’s cheques from 1 PM the following day. You must also check on the delivery time and day to be certain, since ordering it over the weekend can prolonged the delivery.

If you prefer traveller’s cheques over the weekend, you’ll likely to pay additional fees or charges. Check our guide about the best ways to spend abroad to know more.

Using a Prepaid Card

Applying for a new prepaid card could normally take between 3 to 5 days after completing your application. Before considering a prepaid cards, you must compare the costs of using it to spend overseas. It is ideal to pick a card with low overseas charges to save money on your trip.

On the contrary, if you have a prepaid card, you can just top it up ready for your trip overseas. Nevertheless, it may cost you expensive charges when spending it overseas.

We suggest checking our guide on the best ways to spend abroad.

Using Debit or Credit Card

Debit and credit cards work in different ways abroad. It can rip off your pocket if you failed to choose the most suitable way to spend abroad.

If you wish to apply for new debit or credit card, it can take between 3 to 7 days for the delivery or much longer if you applied over the weekend.

Should you try your luck getting your new card and PIN via postal service within a week, make sure you have available funds or any backup plan in case of delays.

Using an Existing Debit or Credit Card

A quicker and easier option would be using an existing credit or debit card. But, this might not be the best option to choose.

Moreover, if your existing debit or credit card carries charges when using it overseas, you should refer to our guide on the best way to spend abroad. You can also refer to our guide in getting the best deal on travel money. If it does not charge you for spending overseas, then you can grab your luggage and fly your way to your holiday destinations.

Booking a Holiday Using a Credit Card?

A Guide on Travel Money Exchange Rates

What is travel money?

Before leaving for a trip, take time to think of how you can make the most of your money overseas.

For past travelers, checks were known as the popular means to take money abroad. Today, travelers are more inclined to use prepaid travel cards, credit cards, or cash through ATM withdrawals.

In this guide, we will focus on how you can prevent those pesky currency exchange costs when making purchases overseas. Additionally, this can help you know more about travel money exchange rates. We can also help you compare financial products quickly and easily and help you ease the stress and worry of making financial decisions.

What is Travel Money

Travel money is defined as the currency that you take overseas on your holiday to spend. As you take a trip abroad, you have to determine on your preferred option or mode of payment for products or services that you might need. You can either choose cash or take prepaid cards instead.

Moreover, it is ideal to compare travel money from different destinations. This can help you get the best exchange rates. The exchange rate is the amount of travel money you can get in return for what you pay. For instance, for every £1 you pay, you’ll get a $1.40 for an exchange rate of 1.4 in the US dollar.


Because of the current COVID-19 or coronavirus pandemic policies and prevention set by the UK government, providers of travel money are no longer pursuing collection services. But the delivery of travel money is still in circulation as usual.


Should I buy currency online?

Everyone enjoys taking a holiday and traveling to places. However, it can be tricky to figure out where to buy travel money. You may have to consider certain factors when buying travel money such as:

» Where to get the best rates of travel money

» Where to compare holiday money

» The amount of travel currency that you should bring

It would be a good idea to shop or currency online when checking for the best rates. You can compare rates online rather than doing it the airport or with the high street.

Furthermore, doing it online might give you a better exchange rate or a better deal. This is because the travel money costs are extremely lower if they’re online.

Getting the Best Travel Money Exchange Rates

By shopping online and comparing different providers offering travel money deals, you’ll likely to find the best currency exchange rate.

By all means, you must avoid getting your travel with high street or at the airport. Getting it at the airport can cost huge price. This means you have to prepare before boarding a plane and enjoying your holiday.

Moreover, you have to compare your alternatives when finding your travel money. Considering the factors below can help:

High Travel Money Exchange Rates

Compare currency rates to ensure getting the best deals. This means the higher the rate the more travel money you can get.

Delivery Charges

The costs of delivering your travel money may differ when you exchange currency online.

Special Offers on Travel Money Exchange Rates

Try checking travel money offers and see if you can get the best deals ad higher exchange rate or even free delivery offers.

By considering these factors, it would be possible to find the best deals of travel money online before you take your trip across the globe. You can also check our guide on how you can get the best rates and other costs.

Keep in mind that currency exchanges are changing over time. This means it is possible to get different rates from providers on various days.

Can I get commission-free travel currency?

There are service fee charges  each time a provider exchange your money. This is called a commission fee, which is normally a hidden charge within the advertised exchanged rate.

It’s not new to several companies advertising no service charge or 0% commission fee online or on high street. However, they might possibly take the service fee into account through a less competitive exchange offer.

Can I buy travel currency online?

You can buy currency online; but, the amount you can trade differs between providers. However, you are allowed to exchange up to £7,500 online from the best travel money providers.

Additionally, the amount you’ll pay is usually rounded to the nearest figures. For instance, if the exchange rate of pound to euro amounts to 1.29, you have to pay £310.32 for 400 instead of paying £300 for 386.70. You must also take note that you can only withdraw some of the currencies if you’re in the country of destination. These are known as closed currencies.

Restrictions on Getting the Currency Delivered

The Royal Mail’s special delivery service. will deliver the currency when you buy online. So, you have to be at home to sign the delivery. Individual deliveries apply for cash orders that are valued more than £2,500 due to travel insurance purposes.

Is there next day delivery for currency?

Once you compare travel money, you might notice some providers offering next day delivery. This is possible through utilising Royal Mail’s Special Delivery Guaranteed by 1 pm service.

You will normally pay additional costs during a next day deliver. So, try to scrutinize how much it’s worth. Another alternative to avoid delivery charges is utilising pre-order currency that you can pick up in stores.

Codes for Different Foreign Currencies

Usually, travel money providers have a three-letter code for each of the currency. The most common for UK travelers are as follows:

GBP – UK sterling/£

EUR – Euro/?

USD – US dollar/$

AUD – Australian dollar/$

NZD – New Zealand dollar/$

CAD – Canadian dollar/$

CHF – Swiss franc/Fr

JPY – Japanese yen/ ¥

You must take note that exchange rates are normally in pairs. It implies the costs of the second currency when buying one unit of the first currency. 

Example:

  • GBP/EUR 1.21

This means it takes 1.21 EUR to buy £1.

  • EUR/GBP 1.21

This means it takes 1.21 GBP to buy 1 EUR

How much travel money should I take?

The answer to how much travel money to take depends on your itinerary. You must carefully consider budgeting the costs of your travel to ensure that you don’t run out of money. Besides, you have to consider the following factors in making a budget:

your destinations

accommodation expenses

food and meals

transport

entertainment or events

emergency expenses

You must also take note if the country you’re traveling to impose charges on tourist tax and other entrance fees. You have to make sure that you take all the costs into account before taking the trip.

Can anyone buy my currency back?

You can utilise a buy-back service in converting your money back to pounds in case you have money left from your trip. Through this service, you’ll know the rate you’ll get back when converting the money. For details, you can check our guide on Compare Euro Exchange Rates.

Travel Money Cards and Alternatives

After comparing the currency exchange rate, you might find out that taking cash is not an option for you. This means you have to look for alternatives that could be suitable for paying for products or services abroad. You can take a certain amount of cash and consider options that include:

Credit or Debit Card

Credit cards are widely accepted, yet it entails charges for every transaction. Before taking a holiday trip, you have to inform your bank to ensure that your card remains active.

Prepaid Cards

You can load your prepaid cards with foreign currency or pounds which you can use around the globe.

Travellers’ Cheque

You can convert your pounds into a foreign currency cheque and sign it. These cheques can be cash when you’re overseas. These are rare in practice due to very few banks offering it.

Pros and Cons of Taking Cash as Holiday Money

As you decide whether to take cash as your travel money or holiday money, you must know both its pros and cons.

Pros

You are compelled to stick to your budget

Locking in a specific exchange rate for the entire holiday trip

When the exchange rates go lower than what you have, you’re secured for exchanging it at a better rate and cash it

Cons

It might be lost or stolen

Can prevent you from getting the best travel money rates

It might be hard if your accommodation requires credit card payments

Taking cash is less secure as using a credit card

You can’t take advantage in case the exchange rate goes u

 

A Guide To Trust Deeds In Scotland

Almost everyone experiences financial difficulties at some point in life. In certain instances, unsecured loans, credit cards, and other bills add up to an amount that one cannot reasonably hope to repay. If you are facing this situation, you should consider a Scottish Trust Deed.

In this way, you can utilize debt consolidation as a tool to escape financial burdens you can no longer sustain. It is a much better option than borrowing additional money or resorting to the use of credit cards, which are actions that only make your situation worse. A Trust Deed is debt solution designed to help you pay a manageable portion of your debt each month and discharge the remainder at the end of the Trust’s term.

What is a Scottish Trust Deed?

A Scottish Trust Deed is a scheme designed and backed by the government to help you consolidate debt from all sources into one monthly payment that is lower than the total amount of all your individual monthly repayments.

It is only available to residents of Scotland and is a formal arrangement that is legally binding between you and your creditors. Fortunately, it is not necessary to apply for a loan to enter into such an agreement. However, you must have over £5,000 of debt to qualify for a Scottish Trust Deed.

Types of Scottish Trust Deed

Trust Deeds in Scotland are a legal agreement, supported by the Bankruptcy (Scotland Act) 1985, between debtors in Scotland and their creditors to pay off their debts over a pre-agreed period of time. There are two types of Trust Deed:

A ‘voluntary’ Trust Deed is where an agreement is made between a debtor and their creditors to repay part of what they owe. However, unless creditors agree to all its terms, this type of deed is not binding.

A ‘protected’ Trust Deed Is however binding on all creditors. Non-agreeing creditors are denied from enforcing their debt by sequestration or any other means.

Scottish Trust Deeds – The Benefits

Scottish Trust Deeds are similar to IVAs and have the following benefits:

  • Instead of managing multiple payments to different creditors, you only have to make one affordable payment each month
  • ALL your creditors are bound by the terms of the agreement
  • All interest and credit charges on your existing debts will be frozen
  • Your outgoings will be fixed for a reasonable length of time – normally four years

Scottish Trust Deeds – The Risks

There are a few factors to be wary of when considering taking out a Scottish Trust Deed. These include:

  • Your credit rating will be affected
  • You will not be able to be a Director in a Limited Company
  • You may be made bankrupt if you fail to meet the payments of a Trust Deed
  • All your assets and liabilities have to be declared upfront and they may be sold to release their value (including any equity in a property)

What Costs Are Involved?

This depends on how much you owe (and to how many creditors). You must employ the services of a qualified and registered Insolvency Practitioner who will charge a fee to take on your case along with ongoing management charges (taken from your monthly payment before it is disbursed). Typically, an average Trust Deed will cost £4000.

What Debts Can Be Included?

If you are completing debt consolidation through a Trust, you are required to submit all unsecured debt. This may include catalogue debts, payday loans, overdrafts, credit card debt, bank loans and similar obligations.

Trust Deeds typically do not include mortgages and other types of secured debt. In most cases, secured debts must be paid by you to avoid repossession. You also cannot include student loans or social security over-payments in a Trust Deed agreement. You can obtain debt advice if you are unsure which of your loans are secured and unsecured.

How Long Does A Scottish Trust Deed Last?

A Scottish Trust Deed typically lasts for a period of four years, although the government may consider granting a longer time frame depending on your individual circumstances. At the end of the four years, your creditors write off your remaining debt, with certain exceptions.

Does a Trust Deed Affect My Credit Rating?

Your credit rating may be negatively affected by a Trust Deed. Information about debt consolidation and personal insolvencies usually remain on your credit report for approximately six years. However, because you are opting to consolidate debt, it is unlikely you would be trying to borrow money during the period of the trust.

How Fast Can the Trust be Set Up?

In certain cases, a protected Trust Deed can be arranged in less than two months. The time frame may vary, however, depending on your individual circumstances. In almost all cases, there is a statutory five-week period during which the terms of the Trust Deed are considered by your creditors. At the end of the five weeks, they can either make objections or approve the arrangement.

What Happens To My Bank Account?

It is recommended that you open a bank account at a different banking institution prior to applying for a Trust Deed. This is because your bank may have the authority to freeze your bank account or simply close it entirely, particularly if they have withdrawn all your cash.

How do I Know I’m Protected?

Your IP sends a written notice to your creditors outlining the details of the proposed trust. As previously mentioned, the creditors have five weeks to reject or accept the proposal. The Trust Deed becomes protected if few or no creditors raise objections to the terms.

Once the Trust Deed is in protected status, its terms are binding and must be followed by all relevant creditors. Fortunately, provided you properly follow the terms of the arrangement, you are protected from your creditors and any action taken by debt collectors on their behalf.

Who Is Responsible For Fees?

The fee amount is agreed upon by your creditors and trustee at the time the Trust is created. The fees are drawn by the IP from monies contributed to the arrangement by you.

Am I Debt Free After Discharge?

Provided all unsecured debt was included and you have met your obligations to your Trust Deed, you are completely free of unsecured debt once you are discharged. However, if you borrowed money after the debt consolidation, you may still have financial obligations at the end of the term.

Are Trust Deeds Only Available To Homeowners?

Scottish Trust Deeds are not only available to homeowners. Rather, tenants and individuals living with family or friends may also take advantage of this type of debt consolidation.

Is My Home in Jeopardy?

It is uncommon to lose your home because you opt for a Trust Deed to eliminate debt. However, each person’s situation is different, and therefore when getting debt advice, it is essential to ask your trustee for a full written explanation concerning your home and its equity. Verbal promises should not be accepted. Instead, you should have a written notice outlining the exact terms you have agreed to regarding your home.

Am I Required to Sell My Automobile?

In most instances, you are not required to sell your car merely because you are arranging a Trust Deed. It is usually not an issue for you to keep your automobile, provided it is necessary to your lifestyle. However, if it is worth £3,000 or more, you should discuss it with your trustee, as this may make the circumstances a bit more complicated.

Will I Lose Personal Possessions?

Standard personal possessions that are not associated with exceptional value need not be relinquished when you arrange a Trust Deed.

Will My Employer Know About My Trust Deed?

You are not required to tell your employer about your Trust Deed. Unless he or she is one of your creditors or is specifically seeking out this information, there is no reason to be overly concerned about your employer learning about your Trust.

Will My Trust Deed Affect Future Employment?

Regarding obtaining employment, a Trust Deed typically only affects your chances of securing certain types of jobs, such as those in prison service, fire service, police work or other types of employment where you may be required to handle money. Additionally, it may be difficult to find employment if the company runs a financial check as part of the hiring process.

Ultimately, debt consolidation is an excellent alternative if your personal financial obligations have become unmanageable. If you are concerned about debt collectors and delinquent monthly repayments, you should consider a Trust Deed as a method of debt consolidation. Seek debt advice as soon as possible to find out more about this option.

Solutions For Businesses In Debt

If your company is in a bad financial position and can no longer continue to trade then there are options which you can use to stablise it, some of which will allow you to continue to trade whilst you restructure. Here is an over of 4 of the most common solutions;

  • Compulsory Liquidations
  • Company Voluntary Arrangements (CVAs)
  • Winding-up Petitions
  • Pre Pack Administrations

Compulsory Liquidations

Compulsory liquidations are common in business circles. They usually occur when creditors or the government asks a company to be liquidated. The reason for liquidation varies.

In most cases, the creditors are usually seeking to bankrupt a company. The government, on the other hand, orders for this form of liquidation if a company is involved in tax fraud or has been carrying out fraudulent activities.

Process

Compulsory liquidations are not executed instantly. The process starts with either the government or creditors requesting for a court order to liquidate a company.

If the court sees enough evidence to warrant liquidation, it compels the business to stop operations immediately. By ordering this form of liquidation, the court is able to ensure that all those who incurred damage are compensated and fines and any punitive damages are paid.

When is Compulsory Liquidation used?

This type of liquidation is normally used when a creditor is tired of waiting for their payment. So, he or she petitions to the court to get a wind up order. The minimum amount money owed that can allow one to file for insolvency is £750.

Winding-up Petition

The winding-up petition is a legal document that the creditor files to the court in order to start the process of winding up the company that owes them money. Once filed, the winding-up petition and a hearing date is formally advertised. This will lead to the freezing of all bank accounts that belong to the company.

Submitting a Winding-up Petition

To formally submit a winding-up petition, the creditor sends a written application to the court. The application must contain substantial evidence that the company in question is insolvent and is not paying their debts. It then takes 6 to 8 weeks before the hearing commences.

During this period, the insolvent company can do several things to avoid compulsory liquidation. In order to successfully execute these options, the company must seek business debt advice from insolvency practitioners.

Who Performs Compulsory Liquidation?

This form of liquidation is a court directed procedure. Normally, an official receiver is selected from the court to do the winding up.

The official receiver can decide to pass the case to an insolvency practitioner for them to liquidate the assets. The official receiver performs the rest of the winding up and carries out an investigation to determine the alleged insolvency of the company.

Alternatives

There are several alternatives to compulsory liquidation. They include:

  • Creditors Voluntary Liquidation
  • Company Voluntary Arrangement
  • Company Administration Process

These methods are more flexible and have less detrimental repercussions.

Avoiding Compulsory Liquidations

There are ways through which a company can avoid this form of liquidation. It can do so by acting quickly and seeking voluntary arrangements to pay the debts within a set timeframe.

To know the best options that are available, the company needs to get business debt advice from professionals. This way the company can choose the right option.

Administration

Administration is usually the best option, especially if the company has a viable future and reliable cash flow. It ensures the company’s survival by protecting its assets from creditors. This gives the company time to restructure and avoid termination.

Compared to insolvency, administration does not offer great return to creditors. Moreover, it eliminates the possibility of any return. This increases unemployment and prevents the chance of building a successor business.

Act as Soon as Possible

The best way to deal with financial problems in a company is to act quickly. The company must get business debt advice as soon as they spot any problems, like decreasing cash flow and increased pressure from creditors.

Through early detection, the company can take the necessary measures to avoid serious consequences such as liquidation.

During compulsory liquidations, the companies in question can get advice from a licensed insolvency practitioner. He or she offers advice about formal insolvency procedures and explains each insolvent winding-up process to make sure that the company directors are familiar with each of them before making a decision.

Before hiring an insolvency practitioner, it is important to ensure that he or she is licensed. This is because there are some unlicensed professionals who offer misleading information.

With the right information and advice, the company gets to avoid any extra costs during the procedure.

Company Voluntary Arrangements (CVAs)

A CVA or Company Voluntary Arrangement is a common business recovery procedure for insolvent companies. This particular insolvency procedure enables a company that has debt problems or that has become insolvent to come to a voluntary agreement with its business creditors to structure the repayment of all or some of its financial debts over a stipulated length of time.

How Do They Work?

The first part of a CVA is the approval process, which normally takes about 28 days, but in some cases can be up to three months.

The approval process begins with the creditors being asked to take a vote whether or not they wish to accept the proposal. This usually takes place at a special Creditors’ Meeting, although most votes are cast by proxy instead of the creditors being there in person.

Seventy-five percent of unsecured creditors by value who vote must agree to it, as well as fifty percent of non-associated creditors, prior to any CVA being made binding. As a major creditor in the company insolvency, the insolvency practitioner must also approve the procedure.

When the CVA is approved, the company will make a monthly payment from the continuing trade profits. A company also has the option of selling some of it’s assets to make these monthly payments. Under the purview of the appointed insolvency practitioner, the payments are then distributed to all the creditors, either on a monthly basis or as a lump sum.

How Can They Help You Manage Your Debt?

Business debt advice commonly recommends CVAs for a variety of reasons. First, debt deferral reduces cash flow pressure so that your business is not overwhelmed by growing, unsustainable debt.

It also offers a far more realistic repayment structure than other debt management programs so that you pay what the company can manage without straining its finances more than they already are.

Creditors are also more likely to prefer a CVA because it offers them a much better option for recouping costs than flat out business closure or liquidation of assets. Another way this helps you manage your debt is freezing all of them so that there is no additional interest accumulating like it would normally.

And at the end of the term of the CVA, the remainder of debt that hasn’t been repaid is written off.

What are the Pros and Cons?

There are very many advantages to the Company Voluntary Advantage. The first advantage is that it’s a very flexible business recovery procedure, while still being formal and legally binding. It’s not indefinite, and it has a pre-defined agreed on timescale so that you have a clear path ahead.

The business can continue its day to day operations and trade without having to change ownership, management, or lose its workforce. It costs far less than options like structured administration and liquidation. There is rarely any need to buy back or dispose of assets.

The reduced strain of incoming cash flow and realistic payment timelines keeps unduly stress off the company.

The primary legal advantage is that it provides court protection to the business and places a moratorium on creditors raising further legal action. CVAs also offer the chance to reform and restructure the business — usually by removing unprofitable areas — while remaining under management’s control with very little intervention, if any.

The main incentive for a company to choose to go down the Company Voluntary Arrangement channel is that it has a much greater prospect of salvaging the company. This has the dual benefit of saving jobs and also returning value to creditors and shareholders alike.

The only foreseeable disadvantages are the potential for possible liability and the chance that the entire procedure could take a very long time to be complete, which may not be desirable if you want to just abandon the company.

Additionally, an insolvency practitioner could decline a Company Voluntary Arrangement if there has been a history of poor payment or lack of compliance.

You Should Know…

While a Company Voluntary Arrangement certainly creates a firm platform for rescuing a business in distress, it is immensely important to act as soon as possible. It is also important to note that all businesses and situations are different, and for individual cases it is always best to consult a business debt advice professional.

Winding Up Petitions

A winding up petition (WUP) is court-instituted process that seeks to “wind up” the affairs of a business that cannot pay its creditors. In most cases, this happens to a business that cannot pay debts of more than £750.

Some of the people who can file a petition to wind up a company include its directors, any creditor, the Secretary of the State, an administrator, or a clerk of the magistrates’ court.

Purpose

The purpose of a seeking to wind up an insolvent company is to ensure all its affairs are in order. This includes stopping all its operations, collecting money from its debtors, selling any disposable assets, settling legal disputes, terminating all existing contracts, and settling its debts. Take note that a WUP does not mean that all creditors will get their money.

How The Process Works

To file a winding up petition, one must prove that the company in question owes him or her more than £750. In addition, one must prove that the company cannot pay up the amount of money that it owes.

One way of proving these claims is by getting a form for a statutory demand from your local court and serving it to the business that owes you money. If the business does not pay you within 21 days, you can proceed to file a winding up petition.

You can issue a claim for judgment against a company if an earlier execution does not result in the seizure of assets that can clear all your debts. Another option is proving that the value of a company’s debts is more than its assets.

Since this process involves legal issues, it is wise to hire a solicitor to help you present such a petition in court.

Your advocate will help you complete form 4.2 and a statement of truth, issue the petition, serve the petition, as well as withdraw the petition if necessary. Your solicitor will also come in handy during court hearings.

Court Hearings

Hearings vary depending on where you file for a winding up order. Nevertheless, hearings always take place on the date indicated on the petition. It is not necessary for the individual or business entity that filed a petition to appear in court. They can instruct their solicitors to represent them.

At this stage, one can request the court registrar to make a winding up order. Creditors can also request the registrar to dismiss the petition if the company that owes them money settles its debts.

If the registrar issues a winding up order, the official receiver will begin the process of liquidating the company involved in this case.

This includes investigating its affairs to establish the reason it failed, advertising the winding up order in the London Gazette, meeting with creditors to appoint an insolvency practitioner, as well as collecting and selling company assets in order to pay creditors.

Pros

The threat of a wind up order can prompt a company to pay its debts as quickly as possible and seek business debt advice. This is especially true for businesses that want to protect their reputation.

Secondly, the entire process is fast and can force a business to wind up its operations within six weeks. Thirdly, this process is quite affordable compared to issuing a claim.

Cons

To start with, this process can be messy if any of the parties involved dispute evidence presented in court. The debtor may mount a successful defense leading to the dismissal of the petition.

Secondly, it may be impossible to reverse the legal process seeking to wind up a company even if the outstanding debt is paid.

For instance, support for your petition from another creditor will lead to the closure of a company even if it pays your debt. Thirdly, the liquidator enforcing administration orders will distribute money realized from sale of company assets in proportion to the value of one’s debts.

A WUP may be necessary in the event a company is unable to meet its financial obligations, particularly to its creditors. One can institute such a process for as little as £750. The pros of a WUP include ability to jolt a debtor to pay off outstanding debts, inexpensive, and it is a relatively quick procedure.

Conversely, its drawbacks include potential disputes leading to lengthy court hearings and distribution of proceeds from sale of a company’s assets in order of priority.

Pre Pack Administration

Struggling businesses often turn to pre pack administration when insolvency seems imminent because of its benefits compared to the alternatives. A Prepack can minimize the damages of insolvency and provide critical business debt help by allowing an insolvent business to continue its operations while under the process of administration.

The company is also given protection from creditor legal action — such as forced liquidation — during this time.

What is Pre-Pack Administration?

Administration is the process by which an insolvent company may be restructured and sold to pay its debts while under the management of an administrator. In the face of looming insolvency, directors may make all the arrangements to sell their company to a buyer(s) — who are sometimes the directors themselves — before appointing an administrator.

Upon being appointed, the administrator immediately sells the company according to the packaged agreement. The pre-negotiated sale of a company’s assets by its directors before the company even declares insolvency is called a pre pack sale and is the essence of pre pack administration.

How does it work?

Companies that have not yet entered insolvency proceedings may agree to a pre-pack sale to avoid the fate of the company being left solely to the administrator.

In this procedure, the directors agree to either buy the company or sell it under certain conditions to a buyer before involving the administrator.

A pre pack sale happens very fast; often within days of the appointment of an administrator. This process is usually agreeable to administrators because it allows them to avoid the risks involved with marketing the company themselves such as the devaluation of the company’s assets.

What are the advantages and who benefits?

Although it is a controversial topic, the truth is many people benefit from pre pack administration. First, directors sometimes benefit by being able to revive the insolvent company as its new owners. Some criticize the fact that prepacks allow the directors who ruined the company in the first place to be central to its future restructuring.

This, however, is not always the case.

Secondly, employees benefit from the continuity of the business by suffering minimal disruption to their jobs during the administration process. The preservation of jobs also facilitates the survival of the business and adds to its value by discouraging longtime employees from leaving.

Thirdly, the interests of secured creditors are served by the speed of the process.

Additionally, the administrator benefits from the ability to sell the company speedily and often for its greatest value. Finally, the most important benefit of the pre-pack administration process goes to the business itself.

By flowing smoothly from insolvency to administration and restructuring, a business preserves its continuity and value.

What are its disadvantages and who is affected?

The major concerns regarding prepacks come from unsecured creditors. Because of the speed of the process, unsecured creditors may not even know until it a sale has occurred, much less be part of the decision making.

This can lead unsecured creditors to distrust the sale and think they could have gotten a better deal had the company been on the market longer.

Additionally, they may not be able to investigate issues regarding improper incurring of credit by directors of the insolvent company. The end result, they feel, favors the directors and secured creditors.

Is pre-pack administration synonymous with business debt help?

A prepack can help a businesses continue operating under new owners should it ever face insolvency. So, under the most extreme conditions, prepacks are a form of business debt help. Selling the company to new owners –whomever they might be- can save a business from crushing debt and give it the chance to restructure.

Prepacks are particularly effective to those who value the company for more than its cash worth in comparison to other insolvency procedures. A company that becomes insolvent may be forced to liquidate by its creditors or it may be entered into administration.

In any case, the future of the company rests in the hands of the creditors whose prime concern is usually retrieving the money owed them, not the survival of the company.

Pre pack administration is usually chosen over other insolvency procedures because it gives the company the opportunity to overcome debt and become successful again in the future.