Compare prepaid travel money cards vs cash / credit & debit cards / travellers cheque
An analysis made on using a prepaid travel card when compared to cash, debit & credit cards.
Compare prepaid travel money cards vs cash
Advantages of prepaid travel cards over cash
- Prepaid cards have better exchange rates compared to cash. For the same amount of money, you can buy more foreign currency in card than as foreign currency in hand. Whereas in case of cash, for getting money converted directly to foreign currency, the rates are not as good as what prepaid card offers.
- When compare Prepaid travel money cards, they are more safer than cash. Nowadays cards come enabled with chip and pin technology and hence provide more safety features. Whereas, cash is only safe as we keep it. It’s entirely dependent on how safely we handle it. Plus, travellers carrying excess of cash in their wallets are very easy targets for thieves abroad.
- In case of theft or loss of your prepaid travel card, you can have the card blocked and also transfer the funds to your new replacement card. This replacement card is usually given as a backup along with your card kit. Whereas, In case of theft of cash, there is no protection for your stolen money. It’s as good as gone. This is one of the biggest disadvantages of cash.
- When you are travelling to many countries, prepaid travel cards allow you to load multiple currencies in them. When you are abroad and transacting with your card, it automatically detect which country you are in and pays using the reloaded local currency. But to carry different currencies as cash and making sure they don’t mix up and to pick out the correct currency, all these are hassles that travellers can do without.
Disadvantages of prepaid travel cards when compared to cash
- Depending on the prepaid card you buy, it may be subject to additional fees like, activation charges, ATM use abroad charges, inactivity fees, redeeming funds fee etc. So research about the different charges the card carries before buying it. When we compare to cash, once we have cash in hand, then we can use it exactly as it is. No additional charges on currency usage.
- Prepaid cards may not be accepted as a means of payment in all places. There are stores and shops even in developed countries that prefer to do business by cash. Whereas cash is a universally accepted means of payment and it only differs from country to country in the form of different currencies. Useful in places like restaurants abroad, where tipping by cash is a norm.
Compare prepaid travel money cards vs credit & debit cards
Advantages of prepaid travel cards over credit & debit cards
- Prepaid cards usually have a flat “Foreign ATM Withdrawal” fee associated with them. However, compared to credit card and debit cards, this fee is lesser. When using credit and debit cards for withdrawing money from ATMs abroad may prove very costly as they have a Flat “Foreign ATM withdrawal” fee, plus 1-3% of the money you are withdrawing and a currency conversion charge. It all depends on the card you are carrying though. So find out before getting a credit/debit card, how traveller friendly it is.
- When swiping your prepaid card abroad for shopping or other transactions, there is no extra charge present. The money being transacted is already the local currency of the country loaded into the prepaid card. When using credit and debit cards abroad for transactions, Dynamic Currency Conversion (DCC) fee will be levied where the bill amount in foreign currency will be converted to your currency and then charged from your card. Apart from the poor rate of exchange that you get, a markup will be built into this further driving up costs.
- Prepaid cards have their exchange rate locked in advance and this value is not dependent on the volatile foreign exchange market. In case of credit and debit cards, exchange rates are not locked in advance and are usually not favourable to the customer.
- When it comes to prepaid card, temptation not to overspend. Since the funds are loaded in advance and there is no overdraft facility in prepaid travel card. You’d be able to better control your urge to splurge money. Whereas credit cards have an overdraft facility that lets you dip into more funds than you have at the moment. This might tempt you to shop using your credit card and indulge in spending.
Disadvantages of prepaid travel cards when compared to credit & debit cards
- Prepaid travel cards can take up to 3 days to make funds available in them after reloading. This could be a problem when you are out of money abroad. Whereas in case of credit and debit cards, funds are available whenever you need and the credit facility in credit cards can help you borrow extra cash from bank when you are out of money.
- For transactions where we need not pre-authorise the use of a card for billing charges to us, prepaid card can’t be used. For example in certain hotels your credit card details are asked as security against your stay in that hotel. If you were to go without paying the bill, the hotel would be able to claim their due using credit card. This is not possible through prepaid cards.Credit card can be used in transactions where a business can charge a customer through their card without pre-authorisation.
- Unlike money in a debit card, the money available in a prepaid travel card is not linked to any bank account and hence is not earning any interest for you. The money in your bank account to which the debit card is linked is earning a fixed rate of interest.
Compare prepaid travel money cards vs travellers cheque
Advantages of prepaid travel cards over travellers cheque
- Prepaid travel cards are the newer and modern and more technologically better cousins of Travellers Cheque. They are a more safer option and widely used. Whereas travellers cheque are outdated now and not many people use them, nor many businesses accept them. Even banks abroad may not encash them.
- We already discussed about prepaid card fees like activation charges, ATM use abroad charges, inactivity fees, redeeming funds. Even Travellers cheque have fees. We have to pay fees when creating the travellers cheque and later when we encash it. This generally makes them more costly than cash option and forex card option.
- Prepaid cards are very easy to handle and use. Simply put the card in your wallet and swipe it for transactions abroad. Much more of a hassle handling travellers cheque than Prepaid cards as not many businesses accept them as a means of payment. In the world of instant payments via cards, the travellers cheque has lost it’s relevance.
Disadvantages of prepaid travel cards compared to travellers cheque
Traveller’s cheque doesn’t really have any advantage to offer when compared to prepaid travel cards.
So what is the best way to carry money abroad?
- Looking at the pros and cons, when compare prepaid travel money cards on cash, Credit/Debit cards and travellers cheques, we recommend a mixture of both.
- The greater part of your purchases and dealings overseas would be cashless in nature. Take 70% of your total expected expense in prepaid travel card and the rest 30% by cash and carry credit, debit card along as backup.