What is a prepaid currency card?
A lot of foreign exchange businesses will offer a currency card as well as cash or money transfers. There are lots of different ways of comparing them and lots of different charges to take into account. We are all familiar with our debit and credit cards and of course they can be used abroad so are there any real advantages in signing up for a prepaid currency card?
There is a new generation of internet bank current account cards that can also be used as a currency card, sometimes with low fees but we are going to look at a traditional currency cards that you load at the point of purchase then use in the country of your choice.
How do they work?
When you apply for a currency card, you load it with an initial amount of money which is added to the card balance. If you are applying for a card in a specific currency, you will be offered an exchange rate similar to if you were buying travel cash. This exchange rate is used to calculate the amount of funds that will be added to your card. If you opt for a multi-currency card, your balance will remain in Pounds Sterling and will be exchanged into the local currency when you use it.
Purchases made on the card will be deducted from your overall balance, and once your balance is low or reached zero you can reload it. You can top-up again at any time using a variety of different methods including by phone, internet, and credit/debit card, and now most providers have a mobile app which you can use to manage your account. This feature makes currency cards perfect for travelling on a budget or as a family because you know exactly how much you are spending and won’t be greeted with any bills when you return home!
On Compare Holiday Money we showcase 3 types of card:
As the name suggests a prepaid euro card can be used in any of the Eurozone countries and benefit from some of the best exchange rates available. Unlike your UK credit or debit card, most prepaid Euro cards don’t charge you any fees for making payments or withdrawing cash anywhere in Europe.
Specifically designed for use in the USA, prepaid US Dollar cards make a great primary or backup payment method. Chip-and-pin security, brilliant exchange rates and no usage fees.
For use in any country. Multi-currency cards can be used anywhere in the world and your balance is converted into the local currency wherever you use it. Ideal for holidays in and outside of Europe and the USA, or for trips to multiple countries with different currencies.
Are they worth it?
To get an even better insight we fired off some questions to leading currency card provider Caxton FX. We asked them what the advantages were with a prepaid card over cash?
They told us “A prepaid currency card lets you preload currencies on one card and use it as you would a debit card to spend or withdraw cash with no transactions fees. You can lock in a preferential rate before you head off on your travels and even top up on the go using a mobile app for easy loading. The main advantage over carrying cash is that it is safe and secure. A secondary card is also available, so if your card does go missing, funds can be blocked straightaway and you can use your backup”
Are currency cards cheaper to use than a debit/credit card?
Caxton FX explained “While some debit and credit cards may appear cheaper at first glance, a family spending £2,000 on their holiday overseas (hotel, restaurant and ATM withdrawals) could pay an extra £85 to £140 in Dynamic Currency Conversion (DCC) card charges if they pay in pounds rather than the local currency. DCC is a little-known travel money rip-off which makes some credit and debit card cash withdrawals almost as much of a bad deal as buying foreign currency last minute from the airport. However since April 2019, travellers with preloaded currency cards are protected against such charges as MasterCard introduced a block on being able to pay in GBP on all foreign transactions at point of sale terminals and ATMs.”
Can I use it anywhere I can use my credit or debit card?
“The card is accepted worldwide, wherever you see the Mastercard logo.”
Can a multi-currency card be used in Europe or the USA and is it better to use a dedicated euro or US dollar card?
“No need for a dedicated Euro or US Dollar card, the Caxton card lets you preload up to 15 currencies on one card and you can switch balances to different currencies using the app or by logging into your account online.”
How many countries can a multi-currency card be used in?
The multi-currency card is accepted worldwide – anywhere you see the Mastercard logo.
There are certainly lots of advantages to having a currency card and it’s as easy, quick and convenient as using your debit or credit card at home. It’s worth spending time looking at the different fees and charges and it’s always worth thinking about a mixture of cash and a card in case you can’t find somewhere that accepts cards – particularly in the Australian outback or the wilds of Africa for example!
Some providers including Caxton will also give you added value in the form of cashback and/or enhanced rates so look out for those promotions on our website or in the monthly newsletter.
Our thanks to Alana Parsons at Caxton FX for answering our questions and providing some advice.