Financial Travel Tip #56: Prepaid Travel Cards

by Nora on November 24, 2012

 

How do you pay for stuff on the road if you don’t have a credit card? There are times when you just need to make reservations or online purchases with a credit card on the road. (And if you have bad credit, this may not be possible).

And/or, are you concerned about the security of having just a debit card with you, giving potential perpetrators access to all the cash in your bank account?

Prepaid travel cards present a solution to managing your money on the road if you don’t have a credit card, and are concerned about the security of your debit card.

Although they may act and look like credit cards (many prepaid travel cards are issued by credit card companies themselves), they work on debit, not credit. You load the card with money, then you can use it around the world at ATMs, debit machines, and as you’d use a credit card. Thus your potential loss if you run into trouble (theft, etc) is never more than the value of the card.

I’ve never used one because I have a credit card, and the fees of prepaid travel cards – though not exorbitant – are still higher.

Here’s some more information on selecting and using prepaid travel cards, and managing finances securely:

Travel & Money: Using Prepaid Travel Cards

Managing Your Money Abroad: Currency Conversion Rates

Managing Finances Securely While Traveling

 

Other Money-Management Travel Tips

Scroll through this resource for other tips for managing your money on the road:


 

{ 10 comments… read them below or add one }

1 Sylvain November 24, 2012 at 8:36 pm

Yes, that’s a good suggestion. What’s also becoming more and more available are secured credit cards… secured by a deposit in a bank account, acting as guarantee for the bank. Fees are much lower than a debit card by the major credit card issuers, and can be used as a credit card, online too.

Another solution still is to buy pre-paid gift cards. For example, I had some airmiles in my account and I don’t intend to use them for airplane tickets… so I got some Best Western gift cards. I’ll use them along my travels.

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2 theprofessionalhobo November 24, 2012 at 8:50 pm

Sylvain – You’re right! Secured credit cards are another great way to have the benefits of a credit card despite bad credit.
Interesting strategy with the pre-paid gift cards…they might not be entirely practical in all parts of the world, and you’d likely have to organize them before you go, but I like the creative use of frequent flyer miles!

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3 Sylvain November 25, 2012 at 12:24 am

I see the usefulness of secured credit cards beyond bad credit… that could be useful after you’ve been on the road for a while and are unable to renew your original credit cards. Unlike most long-term travellers, I won’t return “home” on a regular basis… when I’ll leave, it will be a long while before I come back to Canada.

Although I will have an address at a friend’s house, it might prove difficult to have a regular credit card after a few years without activity on the credit bureau file, etc.

As for the gift cards, yes, I know they’re not a universal solution, but they’re a good one in my case for my needs since I’ll begin my travels within the US… so, I’ll have a dozen or so nights on the road already paid for 🙂

Planning ahead is important… I just wish the new Canadian biometric passport would be available a few months earlier, and not a few weeks after my departure. In the press release it’s mentioned it would be available in Spring in some cases/regions… I’ll investigate that in a few months.

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4 theprofessionalhobo November 25, 2012 at 9:35 am

Hey Sylvain – I’ve been on the road and away from Canada for 6+ years, and had no trouble with renewing credit cards! You can do it two ways:
1) Call the credit card company about 2 months prior to renewal and give them your current address abroad. Sometimes they’ll send it abroad, sometimes they won’t.
(If you DO manage to get them to send it abroad, make sure you call them back as soon as you receive it and tell them to strike that address from their records, otherwise your NEXT renewal card will be sent to that address as well…..trust me….!)
2) Just have the renewal card sent to your Canadian address, and have your friend forward it to you. This works as long as the card isn’t mailed in such a way that it requires your signature. (You can get around this by giving your friend who manages your mail Power of Attorney for Property, and this way they can act on your behalf).

And if you use your credit card on the road, there’s no problem getting renewed at all…no credit bureau issues, etc.

Enjoy your travels!

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5 Jo November 25, 2012 at 2:22 pm

I had a Travelex card loaded with US$ and in May it wasn’t accepted by many businesses but when I went back to Dallas in August it was much better known! However the only problem I had was that I couldn’t access my account online to see how much money I had left! Every time I got the secret question, which was my mothers maiden name, it came back saying wrong answer….helloooo….I think I remember her maiden name! So I just kept using it until one day a shop assistant told me I only had $4 left on it. Travelex cards are the old Travellers cheques.

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6 theprofessionalhobo November 26, 2012 at 12:11 pm

Hey Jo – Thanks for sharing your experience! Would you use one again?

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7 Jo November 26, 2012 at 12:59 pm

Probably not Nora. I have opened Bank accounts in England and the U.S. so will be cheaper to transfer money that way when the cross rate is in my favour I think. In other countries I will use my credit cards.
The Travelex card was cheaper than Credit cards but that is in NZ where we are hit hard with fees. I only used it in the States.
Hope all is going well in Grenada. Is it hurricane season and have you been there for that before?

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8 theprofessionalhobo November 26, 2012 at 7:29 pm

Hey Jo – Sounds like you have a good system set up now.
It hadn’t occurred to me that credit card fees might be exorbitantly higher in some countries – good travel hack on your part to have used the Travelex!

Hurricane season has ended in Grenada – and I’ve been through two seasons now without ado. It’s well-placed to avoid the vast majority of hurricanes. The temperature is a steady 30 degrees every day…I’m loving it!

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9 Will November 29, 2012 at 10:42 am

Seems like it’s an interesting use case for those who want to curb their spending and prevent any downside in fraud and keeping costs in line. Working within constraints.. I like that.

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10 theprofessionalhobo November 29, 2012 at 1:54 pm

Hey Will – Yes, I agree it’s a great way to work within a budget. If you don’t trust your spending habits, then cap it with a prepaid credit card!

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