How to Use a Prepaid Travel Card

A prepaid travel card lets you load money onto it before you set off, and then you use it to pay for things while you're abroad.

Rebecca Goodman Published on 13 January 2021. Last updated on 20 January 2021.

Prepaid travel cards can be a good way to budget because you will be able to spend only the money you’ve added to the card, so you can’t get into debt.

Here we explain everything you need to know about prepaid travel cards.

What are prepaid travel cards?

Prepaid travel cards work in a similar way to debit cards, although you add the money to the card before you leave the UK. You might also see them referred to as currency cards.

There are three main options when buying a prepaid card:

Single currency cards work if you just need one currency, such as euros or dollars, and you can usually lock in the exchange rate when you add cash to the card.

However, if you’re travelling to different countries, you will need a multiple currency card that allows you to have a number of currencies on one card.

Sterling prepaid cards, meanwhile, hold pounds which are automatically converted to the currency you require when you use it, based on that day’s exchange rate.

How do prepaid travel cards work?

When you take out a prepaid travel card, you will then have to load money onto it; this can usually be done online. You can then use it as if it’s a debit card to withdraw cash from cash machines or to pay for things when you are out and about.

Is my money safe on a travel card?

Most prepaid card providers will hold the money you add to the card in an account with a different bank or building society account for security. This means if the card provider were to go bust, that money should be safe because it is in a separate account.

However, if that bank or building society were to collapse, the money would not be protected by the Financial Services Compensation Scheme, unlike money held in a standard current account. It is for this reason it doesn’t make sense to keep any more money than you need on your card.

Like with a debit card, you will need a PIN to use your card. If you lose it, or it is stolen, contact your provider straight away to freeze it.

What if I have bad credit?

It can be difficult to get credit cards or bank accounts if you have a poor or nonexistent credit record. However, there are no credit checks carried out when you take out a prepaid card because you can only spend the money that has been loaded onto the card.

How expensive are prepaid travel cards?

The exact cost depends on the provider, but there are some common fees that apply to most cards. These include fees for applying, replacement cards, making transactions or withdrawals, and in some cases inactivity. You may have to pay to top up your card, and some cards charge a monthly fee simply to have the card.

You will also need to factor in the exchange rate. Some cards allow you to lock in an exchange rate when you add money to the card, whereas others work in the same way as credit and debit cards and use the rate at the time you make a transaction.

Why would you need a prepaid card?

Prepaid travel cards are a great budgeting tool as you can’t get into debt with one and you’ll only have the money available to spend that you’ve loaded onto the card.

However, prepaid travel cards are just one way to spend money abroad and there may be other suitable options for you. Specific travel credit cards could work for you, and you don’t need to pre-load them; you can just use your card as you normally would.

With credit cards you also get the protection of section 75 of the Consumer Credit Act. This gives you an extra layer of security when you use a credit card to buy anything which costs between £100 and £30,000.

How to find the best prepaid travel card for you

When looking for a prepaid travel card, there are several important things to consider such as the fees and the exchange rate, as well as the protections in place for your money. These details will be in the terms and conditions, but a good price-comparison site can help you judge cards side by side.

Source: Getty Images

About the author:

Rebecca Goodman is a freelance journalist who has spent the past 10 years working across personal finance publications. Regularly writing for The Guardian, The Sun, The Telegraph, and The Independent. Read more

If you have any feedback on this article please contact us at [email protected]