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Using Pre Paid Credit Cards Abroad Pros and Cons

By: Garry Crystal - Updated: 11 Sep 2012 | comments*Discuss
Pre Paid Credit Cards Currency Exchange

A pre paid credit card is one the best ways to spend money abroad. Holidaymakers can save money on currency exchange and transaction fees but there are some downsides to pre paid cards.

How do Pre Paid Credit Cards Work?

Pre paid credit cards can be used in exactly the same way as a normal credit card when on holiday. There are pre paid currency or travel cards specifically designed for use abroad. These cards come with a number of different ways to save money including discounts on currency exchange. Some pre paid credit cards are available only online and this does help to cut out the additional fees charged by the traditional currency bureaux. Consumers should shop around as some travel cards are offered free of charge with no monthly or annual fees.

How Do You Load Money Onto an Online Pre Paid Credit Card?

Loading money onto online pre paid credit cards for currency exchange is a simply process. Customers simply choose the amount they wish to exchange, usually euros or dollars, and the transaction is made via their bank account. Choosing a debit card to load fees onto the currency card will mean no additional fees to pay when loading. Customers can see their currency balance online and top-up when required.

How Can I Find Suitable Pre Paid Credit Cards?

It shouldn’t be too difficult to find a great deal on a pre paid currency credit card. Online only providers can be the best option; the fees are lower and all business is conducted online. Pre paid currency exchange cards such as the FairFX card do not charge a membership fee, and obtaining a card is free with the first cash top-up. There are pre paid credit card comparison sites that will give information on the wealth of cards that are available. Customers should choose the card that has the lowest fee for the transaction type they will be most likely to use abroad.

Do Pre Paid Credit Cards Come with Lower Transaction Fees?

An example of how pre paid currency credit cards beat the traditional credit cards is the automated teller (ATM) fees. Using a traditional credit card abroad to withdraw money from an ATM will come with many fees. A traditional credit card will apply interest as soon as money is withdrawn from the ATM. There will usually also be charges for the currency exchange of the money withdrawn and there can be additional fees for using the card abroad. With a pre paid credit card that is specifically designed for currency exchange there will simply be one ATM fee, usually just under two pounds per withdrawal.

What Other Savings Can Be Made with Pre Paid Cards?

Another plus point in favour of the pre paid currency cards is that using them in restaurants and bars abroad can help to avoid the loading fee. A loading fee is a conversion rate charge applied by the restaurants themselves when customers pay by pre paid credit card. By using a pre paid currency credit card, the currency exchange has already taken place; no loading fees to pay. This means great savings when compared to traditional credit cards and even debit cards. Restaurant loading fees can be as much as three percent, and this would be applied to every restaurant transaction abroad.

What are the Downsides of Pre Paid Credit Cards Abroad?

One of the downsides of any credit card is forgetting the PIN number. Pre paid credit cards are similar to traditional credit cards when it comes to the overuse of PIN numbers. Punch in the wrong PIN number more than three times and the card will become locked, meaning it cannot be used until a new PIN has been obtained from the provider. This can cause problems when abroad especially if the provider does not have a 24 hour help desk. Customers who are using their new card abroad should be aware of the fact that a locked card on a Friday evening may not be available for use again until Monday.

Pre paid currency credit cards will bring major savings when exchanging currency and making transactions abroad. They are clear winners in terms of transaction fees when compared to traditional credit cards. But customers should be aware that insurance and 24 hour customer service options provided by traditional credit cards may not be available with some pre paid credit cards.

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