Prepaid currency cards (or travel money cards) are payment cards that you can load money onto before you go away, and use while you’re abroad.
Unless you opt for a single-currency card (which lets you spend in one currency e.g. US Dollars), a multi-currency card will allow you to hold multiple currencies on your card at once. You can then use this card to pay for things in card machines abroad, as you would with a normal debit or credit card.
You’ll usually need to add a minimum balance to your card when you order it. Most cards will give you the exchange rate at the time of topping up your card, so you’ll know exactly how much currency you have to spend with. Watch out for cards that apply the exchange rate on the day you spend it as these will give you less certainty over your budget.
You’ll be given a PIN for your card. Typically you can change this to something more memorable using an ATM – check with your prepaid card provider for more details.
Once you have currency on the card you can use it abroad just like a debit or credit card. As you can only spend the funds you have on the card, you’ll need to top up when you need more money on the card. Prepaid cards generally offer this service online, through an app, or by phone.
Storing your money on a prepaid card is much safer than carrying lots of cash around with you. Your card is PIN-protected, and can be frozen immediately if you lose it. Since prepaid cards aren’t linked to your personal bank account, there’s much less risk involved if your card is stolen. If you do lose your card, most providers will even send you emergency cash or a replacement card to tide you over for the rest of your trip.
You’re much less likely to get stung by fees when paying with a prepaid card abroad. When you use your debit card outside your home country, you’ll typically be charged a 2.75% or 2.99% non-sterling transaction fee (and often a separate ATM fee on top). Most prepaid cards let you spend without any transaction fees, so long as you pay using a currency loaded on the card. Some prepaid cards do charge additional fees (e.g. a small ATM withdrawal fee), but you’ll know about these up front, and can choose your card based on its fees and limits.
Most cards now come with mobile Apps, so you can top up and track your spending on the go. Since you can only spend what’s on the card and can easily see how much you have left, prepaid cards are great for helping you stick to a budget while away.
You’ll generally get a much better rate of exchange with a prepaid travel card than you would with your debit or credit card. Being able to ‘lock in’ your exchange rate also means you’re protected from any fluctuations in the market, particularly if you top up on a day when the rate is good.
While credit card providers will require you to have a good credit score, anyone can qualify for a prepaid card. They will also have no bearing on your credit history going forwards.
A locked-in exchange rate protects you from any negative shifts in the currency market, but it also means you won’t benefit if the rate suddenly improves dramatically.
Most providers only offer prepaid cards for a limited number of currencies. If you’re going somewhere exotic, you might need to get some old-fashioned cash for your trip.
While prepaid cards can generally be used abroad just like a debit or credit card, because they don’t come with an overdraft and aren’t attached to a bank, there are some things they can’t be used for. For example, you can’t pay for pre-authorised transactions with your prepaid card. This is because your balance might not be enough to cover the final bill amount, and prepaid cards don’t let you borrow money to cover the rest. For this reason, it’s best not to use your card for: Putting down security deposits at hotels Paying to hire a car Paying for petrol Setting up a tab e.g. at a bar
Wherever you are in the world, it’s likely that you’ll encounter a situation where you need a bit of cash. Markets, taxis and smaller shops may be only take cash payments, particularly when you move outside of capital cities. To be safe, it’s a good idea to carry a small amount of cash with you in addition to a card.
When you load your money onto the card, you’ll get the exchange rate on the day you top it up. That amount will remain fixed, regardless of what happens in the currency market – unlike your debit or credit card, which will charge you the interbank rate (which can vary).
Different providers offer different rates, so the exact rate you get will depend on where you buy your card. Some use Mastercard or Visa’s exchange rates, others use these rates and add a certain percentage of the exchange fee and some use the interbank rate (the dynamic rate at which banks swap currencies between one another). The best way to secure a good rate is to look at comparison sites like MSE – which offer real-time comparisons of the rates of the day.
Most prepaid cards have a simple online application process.
Cards are usually free, but often require a minimum load amount (usually around £50). Some providers will charge an application fee, but this is quite rare.
If buying your card in store, you’ll need a form of ID like a passport or driving license. If buying it online, the card will usually have to be delivered to your home address for security purposes.
You can order an ICE Clear card here.
Prepaid cards are an incredible secure travel money option.
Like your debit card, your prepaid card will be PIN protected, and can be easily frozen if lost or stolen. However, since it isn’t linked to your personal bank account, you don’t need to worry about the funds in your main account, so the stakes of losing your card are much lower.
As long as you contact the provider of your prepaid card to freeze your funds, you shouldn’t lose any money. Most providers will send you a replacement card or emergency cash straight away, although you may need to pay £10 for this.
It’s worth noting that the money loaded onto a prepaid card is classified as electronic money (or e-money). This means it isn’t protected from the Financial Services Compensation Scheme (FSCS) if your bank or building society goes bust. For this reason, it’s advisable not to keep large amounts of money on your card.
Prepaid cards vary hugely when it comes to fees, so always look at the fees closely before you choose one.
Key things you might be charged for are:
(Based on exchanging £1000)
|ICE Clear card||1.076||€1,076|
|Post Office Travel Money Card||1.069||€1,069|
|FairFX Euro Card||1.065||€1,065|
|Caxton Currency Card||1.065||€1,065|
|Moneycorp Explorer card||1.064||€1,064|
|Travelex Money Card||1.062||€1,062|
EUR exchange rates were those quoted on the respective providers' websites. Rates checked as of 10:27 on 05/08/2019.