What are they? How do they work? And should you take one on your next holiday?
What is a prepaid travel card?
Prepaid travel cards make taking money abroad easy.
Instead of taking cash, you load the cash onto the card before you leave the UK. Then you use the card to either pay via contactless or chip and pin, or to withdraw cash at ATMs in the local currency once you reach your destination.
Why would I use a prepaid travel card?
It’s all about risk versus simplicity and security.
- Take cash overseas and if your money is stolen you’ll need your travel insurance to pay out or you’ll be left with nothing. Even if your insurer covers you for cash theft, it may take time to get the money to you.
- Take a credit card overseas and it’s easy to lose control over spending, especially as it can be difficult to keep tabs on exchange rates. And unless you clear your balance at the end of the holiday, you’ll pay interest on any debt you build up.
- Travellers’ cheques are still an option, but with the rise of prepaid travel cards fewer places accept them. Even those that do are likely to see fewer travellers’ cheques than they once did, so cashing them could take longer.
A prepaid travel card lets you spend securely without building up debt. They are accepted anywhere you see the Visa or Mastercard sign. And if you lose it, one call can lock the card, protect your money and get a new card sent to you.
Is a prepaid travel card a credit card?
No, although you might often see prepay cards described as ‘prepaid credit cards’. A credit card allows you to borrow money to spend (up to your credit limit) and then pay it back. A prepaid travel card is loaded with your own money and you can spend as much as you have loaded onto the card. You can’t borrow money with a prepaid travel card, but that means there are no interest charges. There may, however, be other charges rolled up in using a prepaid card (see below).
How much money can I load onto a prepay card?
Each card has its own limits. Typically, you might need a minimum of £50 or £100 to begin with and the maximum load for each card may be limited (£5,000 is standard although some offer considerably higher limits).
How much money can I spend on a prepay travel card?
You can spend any money that’s on the card, although some cards may charge a fee if you if you withdraw more than a certain amount in cash each month. So if you plan to use the card to withdraw lots of money via local ATMs, ensure you choose one that lets you access a generous cash amount for free.
Which countries accept prepaid travel cards?
You’ll find most countries accept at least some cards. Some prepaid cards are for use with a single currency only. Other cards can operate across multiple currencies, so if you have a holiday planned in Europe and another for later in the year in US, you could use a single card that takes the money you load and lets you use it in both locations, converting it to euros or dollars as appropriate.
Things get a little trickier if you’re travelling off the beaten track. Even where a card exists for a less common currency, you may find places to use the card may be limited. Always check in advance that a) there’s a prepaid card available in your currency and b) you won’t struggle to use it.
Where can I use prepaid travel cards?
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.
How do I top up a prepay travel card?
Whilst you’ll have to place some money on the card in order to get it, you don’t have to stick at the money you initially load. You can top up your card whenever you like. How you do that varies from card to card, but most cards allow loading via;
- By paying in cash at certain banks or post offices
- Arranging a bank transfer to your card
- Asking someone else to arrange a bank transfer to your card (handy if you’re enjoying a gap year and want your employer or parents to be able to top up your account)
What are the costs of using a prepay travel card?
They vary from card to card so it’s important to do your homework to find the right card for your needs, destination and spending plans.
Fees can include:
- Application fee (a fee to take out the card, although many are free)
- Monthly fees (although most cards start out with no monthly fees, some charge if you retain the card for the mid- to long-term)
- Loading charges (typically 2-3% of the amount you load for certain transactions)
- Cash withdrawal charges (although most cards offer some free cash, some limit fee-free withdrawals to £200 or £400 per month and charge for anything above that)
- Fees on spending
- Fees for not spending – whilst some cards charge for use beyond the set limits, others charge for cards that have no or low levels of activity
How do I choose the right prepaid travel card for me?
The right card for the right location?
First, narrow the field of potential cards by eliminating any that don’t offer the currency of the location you’re travelling too. If you’re heading to Spain, that won’t eliminate many options – everyone deals in prepaid euro cards. That may not be the case if you’re looking for a card offering the Guatemalan quetzal.
Single or multi-currency prepaid card?
Planning a single trip and don’t expect to be heading anywhere else in the near future? A single currency card may be all you need. But if you’re planning several overseas adventures in the next few years, a multi-currency card could save you the hassle of applying for and carrying lots of cards.
Multiple currency travel cards let you load the card as usual, but then the card will either automatically detect the local currency or you can exchange currencies via app as you travel between destinations.
To be effective, you’ll want to ensure all your planned destinations are covered by the card, as multiple currency cards tend to cover fewer (and usually only the major) tourist destinations. That can still often give you the ability to switch between 20 and 50 currencies though, depending on card.
Most cards charge something, but all charge in very different ways. Some can benefit the occasional tourist. Some are designed for frequent travellers. Others are particularly suitable for people who work across international borders and may need to be paid in multiple currencies.
It’s important, therefore, to read the small print to ensure the card you’re looking at will be the right fit for your spending plans.
Always check the exchange rate of the card you plan to choose. Some pick a mid-point between the best and worst rates. Others are more generous. The better the exchange rate the more money you’ll have to spend each time you load money onto the card.
Can I use the card in the UK?
Yes, you can use a travel card in the UK, but if the funds loaded onto it are held in a different currency you’ll pay an exchange rate. Make sure the money on your card is in GBP before using it at home.
How long does it take to get a prepaid travel card in the UK?
You can be approved for a card almost instantly, but it will take a few days for the card to reach you. To be on the safe side, apply two weeks before you travel.
Which prepay travel card should I choose?
It can be tempting to go for the option on your doorstep, but choosing a card because it’s easy to get hold of could cost you in the long run. To find the best prepay travel card for you, compare your options here.