Using prepaid cards for spending abroad

What are prepaid cards?

Prepaid travel cards are the new kids on the block when it comes to holiday money. 

You can buy these plastic currency cards from online or high street retailers and load them with cash in much the same way you would an Oyster card or a pay-as-you-go mobile phone.

Why are prepaid cards popular for overseas spending?

People are increasingly using prepaid cards overseas for a variety of reasons. Some consumers find it reassuring that they can’t drift into the red or overspend on their budget when using a prepaid card, while others are attracted to the security they offer.

As with travellers cheques, money loaded onto a prepaid card will be protected in the event the card is lost or stolen. However, you may have to pay for a replacement card to be delivered to you should this be necessary.

Go further: how to find the best prepaid card - we explain how to make the best choice of prepaid card

Are there any disadvantages to using prepaid cards?

You can usually load sterling, euros or US dollars onto a prepaid card, although other currencies are becoming more widely available. If you’re going to a country where none of these major currencies are used, a prepaid card may not be for you, as you may have to pay overseas transaction charges when using a sterling-denominated card.

In most cases, the currency-exchange rate you get when loading cash onto a prepaid card is fixed at the time of top up. This might be an advantage if you expect money exchange rates to worsen while you’re away – but of course you could find it a disadvantage if rates improve after you’ve loaded your prepaid card with currency.

While Visa and MasterCard prepaid cards are part of the Visa and MasterCard chargeback schemes, it’s worth being aware that you won’t benefit from Section 75 protection when spending on a prepaid card. This means you should think twice before using one for a big purchase, such as paying for flights or accommodation.

Prepaid cards recommended by Which?

Overall, Which? experts rate prepaid cards from CaxtonFX, Escape Travel Money, My Travel Cash card and Travelex because, unlike other prepaid cards, they impose very limited charges. Some prepaid card providers charge you for taking out a card, impose fees for topping it up and apply extra charges for any additional cards you request.