How do prepaid travel cards work?

Prepaid currency cards, also known as multicurrency cards, travel money cards, prepaid travel cards and forex cards, are designed to be a safe and straightforward way to use money abroad.

How do prepaid travel cards work?

Providers often have slightly different rules for their prepaid cards, but typically, you load money onto them before your holiday and then use them like regular bank cards while you’re away. That means you can use them for everyday spending and even cash withdrawals.

There are two main types. 

• Multi-currency cards allow you to load numerous currencies onto one card. You choose the currency you need and then add cash at an agreed-upon exchange rate. This can be a great way of locking in rates and is handy if you’re travelling to several countries.

• Prepaid sterling cards allow you to load money in pounds, which is exchanged when you use it abroad. The downside of this is that you won’t know what rate you’ll get and could be impacted by currency fluctuations. 

Never use a credit card to top up a prepaid card, as this counts as a cash withdrawal and could lead to hefty fees from your credit card company. Instead, use a debit card or bank transfer.

Learn more about withdrawing cash while abroad

What exchange rate will I get on my prepaid card?

The exchange rate you get depends on the provider. Some offer the interbank rate (the rate banks charge each other), some use the rates set by Mastercard or Visa, while others add their own foreign exchange fee. Finding a card that pays the interbank rate will give you the best deal overall.

Find out how to avoid currency conversion while abroad

What fees and charges apply to a prepaid card?

Checking all the fees and charges before choosing a prepaid card is essential. Some will have few or no fees, while others will have a long list.

The key ones to look out for are:

• Application fees – a charge for getting your first card, often £5-£10

• Replacement fees – a charge if your card is lost or stolen, or, in some cases, to replace the card after a year, meaning you’ll need to pay to keep using it and access your funds

• Transaction fees – usually charged as a percentage or a flat fee when you use the card to make purchases

• Withdrawal fees – a cost for using the card to withdraw money at a cashpoint

• Inactivity charges – some providers will charge a fee if you don’t use the card within a certain period – for instance, a month

Advantages and disadvantages of a prepaid travel card 

Advantages of a prepaid travel card

• You can lock in advantageous rates by loading money in advance

• It’s easier to set and stick to a budget

• Thieves only have access to the funds loaded on the card if it’s stolen

• Many prepaid travel cards have helpful security features, such as enabling you to use an app to block a card that’s gone missing

• Perks like cashback or travel insurance are available with some cards

Disadvantages of a prepaid card

• Some have long lists of fees and charges, including replacement fees you need to pay every year

• There are maximum loading or withdrawal limits on some cards

• You can’t always use them to hire cars or at petrol stations

• Sometimes, you have to pay for a replacement card if yours goes missing

• Not all cards are widely accepted everywhere - you should check which cards work in your destination country before applying

What to consider when getting a prepaid travel card

When choosing a card, the first thing to check is that it offers the currency you need. Some cards provide just a few options, while others have more than 50.

Next, you should check the exchange rate you’ll get. Ideally, you want the interbank rate. However, some have quirky rules. For instance, Revolut offers the interbank rate from Monday to Friday but charges up to a 1% fee on weekends. You can beat this by loading the card during the week to spend on Saturday and Sunday.

Unless you’re a frequent traveller, avoid cards that charge a fee if you don’t use them. And make sure that any cash withdrawal limits suit your spending needs.

Alternatives to prepaid travel cards

Prepaid cards aren’t the only way to get a good deal on your travel money. You should also consider the following methods.

Specialist travel debit and credit cards

Most credit and debit cards are expensive to use abroad because they charge foreign transaction fees, sometimes with a chunky flat fee on top. However, specialist cards often provide fee-free spending and interbank exchange rates. Lots also have perks such as cashback or free cash withdrawals. Opting for a credit card will give you Section 75 protection, but you must pay it off in full each month to avoid hefty interest charges.

Foreign currency

If you want to exchange foreign currency for cash, shop around ahead of your trip. Avoid getting holiday money at the airport unless it’s an emergency, as it’s typically very expensive (even pre-booking an exchange and picking up money at the airport can be cheaper than arranging it at the last minute).  Getting money online, at a local exchange or at the post office will almost always result in a better deal than using airport bureaux.

Learn more about travel money