Going on holiday is expensive. Ensuring you have enough cash to adequately pay for all the exciting activities and adventures you plan to take can become more stressful when you are hit with unexpected fees and charges by your card company or poor exchange rates.
But if you have ever asked, ‘Are prepaid cards worth it?’ in the past, now is the time to make the advantageous financial switch.
What is a Prepaid Travel Card?
A prepaid travel card is a financial tool that allows travelers to load specific sums of money onto a card in advance to use while on vacation. The currency used typically matches the currency of their destination.
It can be used for various transactions, including ATM withdrawals and card payments, while bypassing foreign exchange rates and regular transaction fees. This allows you to budget better, manage your expenses, and avoid the hassle of carrying large sums of cash..
How Do They Work?
Prepaid travel cards are used instead of cash, regular credit and debit cards, and traveler’s checks. You load money on the card via your regular debit card, through your bank, or by visiting a credited establishment and adding cash in person.
While they can be used identically to credit cards, you can only use the money you have already loaded, as they do not allow you to borrow money. Proper budgeting is critical for using them successfully.
Types of Cards
Prepaid Euro and prepaid Dollar cards are similar to each other. They are ideally suited for vacations throughout Europe, the United States, and destinations where the US dollar is the primary currency. You can load your card with the relevant currency before your trip, locking in the exchange rate, which helps to protect you from fluctuating exchange rates.
The sterling card works similarly but shows your balance in British pounds. It allows you to spend in different currencies, only converting the money back to the correct currency once spent or withdrawn. It can be used in several countries.
Multi-currency cards are a versatile option for travelers visiting multiple countries during one trip. It allows you to load several different currencies onto one card, holding a separate balance for each. When you spend money, it will automatically deduct the amount from the relevant balance, bypassing conversion fees.
Travel money cards are general-purpose cards that can be loaded with any currency you may need. They may offer different rate advantages than dedicated currency cards, but they have maximum flexibility for your travel budget needs.
Top Advantages
There are three main advantages to using prepaid travel cards.
Safety
Having a travel card is similar to carrying cash but allows you to avoid carrying around too much or being forced to leave it behind in your hotel, even if you do store it in the room’s safe. Should you lose the card or it gets stolen, your money is well-protected as long as you immediately contact the card company and have it blocked.
Depending on the company you have chosen and your holiday location, you may be able to have it replaced relatively quickly. Alternatively, other companies have policies in place to provide cash for emergencies to tie you over until you return home.
Better Exchange Rates
When using your credit or debit card abroad, the exchange rate used is the one on the day of your purchase. This rate changes daily and could fluctuate a fair amount with little warning.
When using a prepaid travel card, you can lock in a more desirable exchange rate by loading your cash in advance on a day with a healthier rate. This is particularly useful for currencies that may be falling in the weeks leading up to your travels, as it will allow you to buy and load a card immediately, giving you more money to spend in local currency once you arrive.
Budgeting
For many, properly budgeting and staying within their means is one of the hardest things to do while on vacation. Spending more than planned while relaxing and enjoying yourself is easy. Because you can only spend your loaded money, prepaid cards are fantastic for sticking to a predetermined budget.
This makes them a popular choice for parents to give to their kids, as it is easily managed and impossible to overspend. For complete protection, it is recommended to have a credit or debit card as a backup for unforeseen emergencies.
Things to Remember
You may want to top up your prepaid card while you are away. Ensure you understand how easy it is to do before leaving on your vacation. Learn how this can be done to avoid unnecessary overseas calls that could be very costly. Most cards can be topped up via text, over the internet, or through your bank card.
Before selecting a prepaid card, look at the various charges related to the application and usage once abroad. There may be numerous additional fees to be aware of, although the top prepaid cards don’t possess these charges.
Finally, prepaid cards are not eligible for protection under the Financial Services Compensation Scheme. Because of this, should you lose the card or it is stolen, you should contact the provider immediately to have it completely blocked.
