With the possible exception of losing your passport, the one thing that every traveller fears most is misplacing their stash of pounds or local currency. Having carefully weighed up the exchange rates before heading to the airport and handing over our hard-earned in exchange for a fistful of what looks suspiciously like Monopoly money to the untrained eye, we have to guard these notes carefully, lest we end up paying the unwelcome charges that accompany cash withdrawals overseas. There are always credit cards, but then we risk having our accounts blocked by security-conscious creditors that flag up use abroad as potential suspicious activity.
What is a pre-paid travel card?
A tangible solution is on hand to protect yourself in the increasingly popular form of pre-paid travel cards. These pre-paid credit or debit card sized flexible friends can be loaded up with a currency of your choosing before travel at any bank, Post Office or Bureau de Change, and used in much the same way while you are on holiday.
Simply select a PIN number to attach to the card, and use it as a debit card to pay for goods and services or make cash withdrawals from an ATM. It’s certainly more aesthetically pleasing, discrete and safety-conscious than wadding up piles of notes in hidden places or carrying a thief-attracting handbag or back pack.
The exchange rate that you receive will be based on that day’s scale, so if you plan on using a travel card think about it well in advance and ensure that you make the purchase at a time that will grant you the most for your money – typically, a pre-paid travel card will have a preferential exchange rate to cold, hard cash.
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What are the pros and cons?
The main advantage of a pre-paid travel card is the protection that they offer as well as undoubtedly being more convenient than travellers cheques or large amounts of cash. As previously stated, you are also able to fix your exchange rate at the time of purchase.
Unlike cash, which is untraceable and irreplaceable, most suppliers will offer to insure your plastic, or at the very least block it from being used by a stranger if you happen to lose it in a strange city (remember to memorise your pin number and certainly never carry it with you). Depending on which supplier you purchased your card from, you may be able to pick up a replacement within the hour (many major international retailers and creditors offer their own variations), and some issuers may even offer you an emergency cash loan to replace the missing funds and ensure that the mishap does not put a complete crimp in your holiday plans. However, be aware that unlike credit and debit cards, pre-paid cards are not eligible for protection under the Financial Services Compensation Scheme.
It’s important to note that you will not be able to run up arrears in your account, which could be deemed an advantage or disadvantage, depending on your perspective. Of course this is a huge benefit when it comes to budgeting, as you will be unable to spend beyond your means, but it may be in your best interests to retain an alternative source of funding such as a conventional credit card in case of an emergency. Life can be filled with unexpected twists and turns, and the idea of being overseas with no access to money can be pretty daunting. However, this restriction is ideal for travelling children.
The last thing to consider before purchasing a pre-paid travel card is checking the small print provided by the issuer. Some cards have to be purchased for a nominal fee, and others charge a commission fee for every transaction, which is far from ideal if you expect to be using it multiple times per day – you’ll soon find that your money disappears before you’ve even had the chance to spend it. Finally, find out if you’ll be able to top up your card while overseas, and if so how. There is little point in saving money on the outset if you then run up a substantial phone bill calling the card issuer to apply more funds. Another item to check is that some card issuers will actually charge you for ‘inactivity’!
Always remember to block and report your card the instant you realise that you have lost it, or you have been the victim of theft. You will then be protected as much as possible,and even though you may have to pay for a replacement card, it will prevent others using it. Report the loss to the police, as well as your card issuer, as you may be able to claim on your travel insurance.
There is no such thing as a perfect solution to using currency abroad, but pre-paid travel cards certainly take a lot of concerns out of the process. They may not be an optimum solution as a stand-alone thanks to the inability to run up arrears, but used in conjunction with an active credit or debit card they make for an infinitely more secure option than cash.