Taking your holiday money: prepaid cards or travelers check cards
Although you might think that a pre-paid card is one of the simpler options in fact pre-paid cards offer the most complex mix of features and charges of all the cards that you might consider taking overseas.
For international use you need to get one that participates in the Mastercard or Visa networks. That means that they must have an Mastercard, Maestro, Cirrus, Visa, Visa Electron or Plus symbol on them. Although it’s possible to get pre-paid store cards these do not work abroad and the pre-paid Discover card is useable only in America and Canada; the American Express card Travelers Check Card is no longer available which is probably just as well as the charges made it a complete rip-off.
If you get a card with an Mastercard or Visa symbol on it then basically you can use it in all the places you could use the corresponding credit or debit card with the exception that you can’t use them to rent a car. Although you can use them to guarantee a hotel room, you shouldn’t as this blocks out the money from the card: typically a hotel will pre-authorise around $100 per day of your planned stay and you can’t subsequently use this money for around 30 days. See our segment on credit cards for more information
Most of the time you’ll be offered a card with a Visa Electon or Maestro symbol on it. These work in exactly the same way as debit cards with the exception that there’s no link to your bank account. You can’t use these to rent a car nor, normally, to guarantee a hotel reservation. See our segment on debit cards for more information on these cards.
Finally, there are the cards with Cirrus or Plus symbols on them. These work just like cash cards.
So what’s different? First, you can get these cards regardless of your credit history and some will even let you build up a credit history. Second, their charges are significantly different from normal cards. Typically for a pre-paid card there’s a charge to issue the card (generally $5 to $20), charges to add money to it (around 2%), sometimes an annual charge (anything from $5 to $100), charges per transaction (either a fixed charge of $1 or more and/or a percentage of around 2% with a minimum of $1 or so) and, of course, foreign currency conversion charges of around 3%. Those charges mount up very quickly eg on $150 it would cost around $30 to get the money on a card vs around $10 by way of travellers cheques which, of course, goes some way to explain why they’re so popular with travel agents.
The downsides are basically those charges. You will almost always be better off simply using your own cards on holiday regardless of how high the charges may appear to be as charges on a pre-paid card are sure to be even higher. The only advantage that you might have is if, say, you only have a Visa card and the pre-paid card is a Mastercard as that would potentially give you more flexibility.
That’s pretty much it for the means of taking money on holiday as I’ve covered cash, credit/charge cards, travellers cheques and cash cards already. However, one thing does remain: what if you find yourself without any money abroad? That is, how do you go about getting money sent to yourself?
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Copyright © 2008-2010 by Arnold Stewart. All rights reserved.