Getting a prepaid card is simple enough - but watch out for the currency you choose.
This article first appeared on Your Money.
For those heading abroad, deciding the best way to pay for things while trying to clampdown on run-away foreign exchange fees, can be a big pre-holiday headache.
For some, using a prepaid card as an alternative method of payment to credit and debit cards may be an option.
Prepaid cards are a good alternative to traditional credit or debit cards when travelling abroad - you simply choose a provider, load cash onto it - whether in sterling or another foreign currency - and use it like a credit card to pay for things while abroad.
Prepaid cards are:
- Issued under Visa or Mastercard, and generally accepted in the UK and abroad;
- Can be loaded with cash from ATMs, over the internet as well as from the provider and the Post Office;
- Are NOT protected by Section 75 of the Consumer Credit Act, so anything you buy with a prepaid card won't have the same protections as if you purchased the goods with a credit card.
Sterling or euro/dollar cards?
According to consumer group, Which? you could be better off with a sterling prepaid card rather than a dedicated euro or dollar prepaid card.
Which? tracked exchange rates on offer from sterling, euro and US dollar prepaid cards over a six week period and found that the best sterling prepaid card beat their euro and dollar counterparts when comparing their exchange rates, loading and ATM fees.
The report showed that spending 500 euros on the best sterling prepaid card cost £5 less than on the best euro prepaid card and £3 less than the best dollar prepaid card on $500 spend.
Best sterling prepaid cards
The Which? investigation picked out the two best sterling prepaid cards in the market.
Which? said: "ICE's sterling Travellers Cashcard consistently offered the best option. The sterling prepaid card charges no foreign exchange mark-up on the MasterCard exchange rate, no foreign ATM fees and a 1.75% debit card load fee. The Travelex Cash Passport Globe and Caxton FX Global Traveller offer the next best options, charging no debit card loading fees or foreign ATM fees.
"FairFx's Anywhere card and My Travel Cash also offered competitive sterling card options matching the best on offer from dollar and euro prepaid cards.
"If you are unlikely to withdraw money abroad, FairFx's Anywhere card offers one of the best options with a low 1.4% mark up on the exchange rate, but it does charge a £1 ATM fee."
Remember that using your debit card abroad could mean that you get hit with a double whammy of charges. Read more here
|"Remember, never use a prepaid card when checking in for a car or hotel. They will have an amount pre-authorised on them by the hotelier or car rental company, which locks the funds even if they don't need to charge you. Use a credit card instead."|
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