Understanding travel money cards: A simple guide to prepaid cards

As banks have continuously improved their systems and product offerings, travellers now find themselves spoilt for choice when it comes to accessing and spending money overseas.

We’re all familiar with cash, debit and credit cards, and their convenience when travelling. And while the humble traveller’s cheque is still available, but far less accepted than they used to be, travel money cards have grown in popularity over the ten or so years they’ve been available, most likely as a result of their flexibility, convenience and fee structure.

Finder.com.au recorded five times more traffic from Australians comparing travel cards on its site in the lead up to the peak holiday season back in 2013, against January of the same year. It also found that the number of people applying for travel cards during this time doubled.

Fast-forward to today, and these pre-paid plastic cards can be used in thousands of ATMs, shops and online stores around the world, and in fact, usually wherever Visa or MasterCard are accepted.

Bessie Hassan, finder.com.au’s money expert, says that travel money cards allow you to load a number of foreign currencies onto the card before you leave Australia. This has the benefit of locking in an exchange rate before you travel, helping you “avoid the effect of negative currency fluctuations while you’re travelling.”

The fees on travel money cards can vary, so it’s worth doing your research. Some providers will whack you with fees to load or top-up the card, you may be charged transaction, withdrawal or ATM fees each time you use the card, and you may also be hit with inactivity fees if you don’t use your card for a period of time. Other cards, like Westpac’s Global Currency Card, waive all of these fees, making them a great alternative or backup to credit and debit cards.

It’s worth researching sites like finder.com.au to find the best deal on your travel money card.

Also be sure to check that the travel money card you’re intending to use can actually be used in the countries you’re visiting – not all cards work in all countries, and not all currencies can be loaded onto travel money cards. Some countries are sanctioned because of concerns around anti-money laundering and terrorist financing, and some foreign currencies are simply not available for use on these cards.

Once you’ve decided which type of card you’d like to use, it’s a simple matter of setting it up online or in a branch. According to Adrian Pin, Westpac’s head of international needs, you’ll need to activate the card and allocate a pin number, just as you would a debit or credit card, and then simply transfer money to the card electronically, or with cash over the counter at your bank.

Pin explains that the different currencies are loaded into ‘wallets’ which are like sub-accounts that you can see in your account via online banking or through the associated app.

“You can load the card with say US dollars, New Zealand dollars, euro, sterling. You can have up to five currencies, all accessible through one bit of plastic,” he says. “It’s not particularly complex. And then you can simply use it as you would use your debit or credit card, wherever Visa or MasterCard are accepted. All transactions are itemised separately, like a bank statement.”

Travel money also cards carry the same security and monitoring features as your credit cards carry. Pin says these cards can also limit your exposure to being scammed or defrauded.

“Typically, the bank will reimburse you in the case of fraud that you’re not responsible for – but if you’ve got a credit card with say a $25,000 limit and that card gets skimmed and compromised, the crooks will usually hit it pretty hard and pretty quick, and they’ll spend that $25,000 up within five minutes around the world,” he says.  

“But if you’ve got a travel money card and you’re in a bit of a dodgy area and you’ve only got $500 on the card, they can only steal the $500, so there’s less risk in terms of loss, and in terms of what they can access on the product.”

Unlike credit cards, which may have a high credit limit and open you up to the temptation of spending more than you plan to when you’re away, travel money cards can be a great way of budgeting your holiday spending money.

Pin says this can work in a couple of ways – the first being that you can load the card with a set amount of money before you leave, and lock in the exchange rate.

“If the exchange rate is really good, say six months before you’re travelling, your holiday in effect gets cheaper because you’re buying currency at a good rate now, and you’re not vulnerable to the rate at the time,” he says. This can work both ways though, he cautions. “You might actually be worse off – but when you shop with your credit card, you basically take whatever rate is there on the day.”

The second way is that you can ‘section off’ money by allocating certain amounts across a number of your cards. “You can control your budget sometimes by just having separate products – in your mind you’ve got a separate compartment of money,” Pin says.

Curiously, recent research from finder.com.au showed that those who used travel money cards tended to arrive home with more funds. The average travel money card holder returned with $267 unspent on their card, while the average Australian arrived home with $165 in foreign cash on them.

If you find yourself with leftover foreign currency on your travel money card, Pin suggests that you can either withdraw the cash, or keep it on the card for your next holiday, and simply convert it to currency you’ll need at the time – just note as to whether your card charges any inactivity fees or is likely to deactivate the card after a period of inactivity.

Hassan says that they debate the value of travel cards regularly at finder.com.au. “On one hand we think they’re dying, because you can use your card for everything, but then they do have these really specific perks about them. They are a really safe option as well.”

Have you used travel money cards? Do you use them as a substitute for or backup to credit or debit cards?

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IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.