Finding a safe, convenient way to manage your money abroad is a key part of holiday planning. And while it used to be a pretty straightforward choice between cash or travellers’ cheques, a new breed of prepaid currency cards are becoming increasingly popular too.
Mastercard is predicting a 25% rise in spending on these cards (sometimes known as FX cards) by 2017 and more British holidaymakers than ever are expected to give them a go this summer.
How do prepaid currency cards work?
Prepaid currency cards are exactly that – a card you can ‘load up’ with all of your holiday spending money – and allow you to check your balance and account details as you go. Thanks to this, they’re great if you want to stick to a fixed budget.
You choose the amount and type of currency you’d like to add, then use chip and pin to pay or withdraw cash directly from ATMs in the country you’re visiting.
Where can you get these cards?
Most major banks, lenders and the Post Office have their own versions. Each offer varying exchange rates and, like the normal money exchange, you add an amount in sterling and they will convert it into to the currency of your choice.
What do they cost?
There is no charge for the card itself, but if you’re holidaying in Europe, most issuers charge a small fee (in the region of £1.50) per cash withdrawal.
However, it is free to spend in the currency of the country you’re in, so paying €20 for lunch in a café in Spain will cost you €20.
Where can you use prepaid currency cards?
The good news is they’re accepted pretty much everywhere! Mastercard and Visa cards will be accepted anywhere their logos are displayed, so you’ll be fine in most places across Europe.
Is there anywhere you shouldn’t use them?
Avoid using the card to pay deposits on things such as hotels or car hire. Although funds aren’t taken from the account they are ‘ring-fenced’ for a few days, so you won’t be able to spend that money elsewhere.
Self-service petrol pumps, road tolls, airline and cruise ship staff will not accept prepaid card payments, so make sure you have an alternative method of payment if you’re planning to use any of these.
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What if your prepaid currency card runs out of money?
Topping up is easy and can be done by phone or online, several lenders even offer a mobile app to make reloading even easier – whether at home or abroad.
What happens if there is money left on cards after a holiday?
You can keep the card to use on another trip or simply ask for the cash to be refunded.
It’s worth remembering that the bureau de change will ‘buy it back’ at a rate that’s usually slightly lower than the rate you bought currency for, so be realistic with how much you’ll spend and if unsure, err on the side of caution – you can always top up more.
What happens if the card is lost or stolen?
Don’t panic – the card cannot be used without your unique PIN, so no-one else can spend your money. And because it isn’t linked to your bank account, there is less risk of identity theft too.
If lost, cards and balances can usually be replaced and restored within 24 hours.