Are prepaid travel money cards worth it? Holidaymakers may be charged a fee to get any unused money back

Holidaymakers are returning from abroad with an eye-watering £429 million of unused cash on their prepaid travel cards, research has found.

According to travel debit card company Currensea, the amount left on prepaid cards has increased by 16 percent from £369 million last year.

These travelers may face additional fees and poor exchange rates when withdrawing their remaining funds, while many will simply forget about the remaining funds on their card after returning home.

Prepaid cards are chip and PIN cards that allow travelers to pre-load cash in another currency and avoid using their main bank account while on holiday.

They are offered by many companies including the Post Office, Sainsbury’s, Travelex and Mastercard.

On average, travelers return from their trip with £89 left on their prepaid card, while according to Currensea, 27 per cent of those using these cards still have more than £100 to spend.

As many as 42 per cent of those with school-age children come back with more than £100, with an average of £109.

James Lynn, co-founder of Currensea, said: ‘UK travelers are wasting a large chunk of their holiday savings by sticking with expensive and clunky prepaid cards that offer poor value for money, high fees and require the hassle of topping up.

‘Topping up prepaid cards before traveling leaves no room for error and often leaves holidaymakers scrambling for cash at excessive ATMs, paying high bank fees if they have to rely on their bank card, or risking returning from holiday with huge amounts of money in their accounts. prepaid cards.’

What are prepaid cards and what are the costs?

Prepaid travel cards work much like a credit or debit card, allowing you to withdraw money from ATMs or spend your money in shops and restaurants.

The main difference is that the card only contains as much money as you are willing to spend.

This has its advantages: you can budget more effectively and lock in one exchange rate when you load the card, rather than a different exchange rate every time you spend money.

According to Currensea, around 13 percent of holidaymakers choose prepaid cards as their preferred way of spending their holidays.

However, these cards often charge fees when you load the card, charge fees on cash withdrawals, and sometimes even on transactions.

For example, Caxton’s prepaid travel card charges £1.50 on withdrawals in Britain, while the Post Office travel money card charges the same.

Both cards also charge a £2 monthly fee for inactivity after a 12-month period.

A third of prepaid card users feel they offer better exchange rates than other payment methods, meaning they could still make losses even if they spend all the money on their card.

Regular debit cards that don’t charge fees for use abroad often offer a better deal.

For example, a Monzo debit card can buy you €1.1697 for every £1, while Caxton’s black card will only buy you €1.14.

Currensea’s own offer, meanwhile, will set you back €1.1676.

Lynn said: ‘Millions of people still wrongly believe that prepaid cards are the best solution when they want to spend money abroad.

‘They are no longer more secure than bank cards as most bank and card providers simply allow you to freeze your card if it is lost or stolen and the fees are not competitive.

‘By adopting smarter spending habits, travelers can avoid excessive currency exchange fees, allowing them to get as good a deal on their holiday spending as they do on flights or accommodation.’

What other options are there, now that prepaid cards have their disadvantages?

Cash remains king

Gone are the days when an envelope full of foreign currency was an essential part of planning a trip abroad. Yet more than half of travelers still consider it an important part of their spending.

The old saying ‘cash is king’ turns out to be true: according to Currensea, 58 percent of Brits still prefer physical money on holiday.

More than a quarter of people, 27 percent, said they use their credit cards abroad, while 27 percent also use a debit card from major retailers.

Spending money can also help you stay within your budget.

Since many ATMs abroad charge withdrawal fees, withdrawing cash in advance can be a wise decision, especially as you can compare exchange rates from different suppliers.

However, these rates may not be the best, especially if you wait until you arrive at the airport to exchange your pounds.

Additionally, when traveling with cash, you run the risk of losing it or having it stolen.