Prepaid Travel Cards: A Smart Way to Manage Your Travel Expenses

Photo: David Ooms

Traveling safely and managing your money along the way is an exercise in balancing multiple risks: theft, loss, high surcharges, and confusing discrepancies. This Travel and Money series discusses various ways to address money and security issues while you are abroad.

Today, the topic of discussion is Prepaid Travel Cards, which can be a useful — and secure — alternative to debit cards and credit cards, as well as a way to hedge against currency risk. (See also: 5 Essential Travel Tools)

Prepaid Travel Cards Basics

A prepaid travel card is generally usable in the place of a debit or credit card. You can withdraw cash at an ATM, pay for purchases, and make travel reservations. And as the name suggests, you prepay these expenses by loading money onto the card.

It is just as secure as a debit or credit card, since the prepaid travel card is protected by a PIN and/or signature. In fact, some would say that prepaid travel cards are even more secure, since the money is not linked to your bank account and has a limited balance (which limits your exposure).

It can also be a handy tool for budgeting, since you would load only the money you plan on spending for the trip onto the card, which helps you stick to your travel budget.

Where to Get a Prepaid Travel Card

Plug in a simple search for "Travel Money Card" and you'll find a number of financial institutions offering prepaid travel cards that are ultimately backed by credit card companies. 

Basics:

• Although these cards look and act just like credit cards, they operate on your prepaid balance instead of credit.
   
• You can use them anywhere credit cards are accepted, including at the ATM for cash withdrawals.
   
• You load money onto the card by direct transfer from your bank account. You can keep loading up the card as many times as you like.
   
• If the card is stolen or lost, your bank account and credit rating won't be compromised. PIN and signature cross-checks also help to keep your cash secure.
   
• You load your home currency onto the card, and money is converted with each purchase, using the prevailing rates on the day of purchase.

Watch out for:

• Keep an eye on the monthly fees, which can be upwards of $2.50US.
   
• You'll probably also get dinged for fees for activation, re-loading money, and making your first purchase.
   
• Every time you use an ATM, you could see a fee.
   
• If you don't use all the money you loaded on the card (and don't keep the card after the trip), you could pay to cash out your funds (e.g., $20).
   
• Some vendors and cards require minimum amounts to be loaded on the card before you can use certain features. For example, if you want to use your card at an automated gas pump, you'll need at least $50 on your card.
   
• The currency conversion charge can be up to 7%.

Travelex Cash Passport

Travelex has their own prepaid travel currency card called Cash Passport. They include — but are not limited to — cards backed by various credit card companies.

The Basics:

• You pre-pay for a specified currency in advance, thereby locking in the exchange rate when you load money onto the card (instead of paying the prevailing rates each time you use the card).
   
• You can use the card anywhere debit cards are accepted.
   
• Cash Passports are currently only available in US Dollars, Euros, or British Pounds.

Watch out for:

• Similar to prepaid travel cards from the credit card companies, you'll be on the hook for monthly fees with Cash Passports, too; around $2.50US.
   
• Keep the number of ATM withdrawals to a minimum, since you will pay for it each time.

UK Residents

If you are in the UK, check out the FairFX Currency Card, which provides US Dollars or Euros and boasts favorable currency exchange rates.

Overall, I don't use — or plan to use — prepaid travel cards, for a few reasons. First off, as a full-time traveler, I tend to juggle many different currencies, and these cards seem a little restrictive for my needs. I also don't like the monthly charges and some of the currency conversion fees.

If I didn't own a credit card, I might actually see some value in traveling with one of these prepaid travel cards; however as a devout credit card user, I think I'm pretty well covered (earning frequent flyer miles to boot).

Do you have experience with prepaid travel cards? Please share in the comments!

Other articles in this Travel and Money series:

• Using Your Debit Card on the Road
• Using Your Credit Card on the Road
• How to Get and Carry Cash Safely and Securely