Once seen as a fool-proof way of paying for your Pina Colada and paella while on the Costa del Sol, the once mighty traveller’s cheque has long been left in the dust.
Sure they may once have been a convenient and secure way to spend your money in lots of different countries, but they often needed more signatures than the Declaration of Independence and weren’t exactly suited to smaller purchases.
Carrying Foreign Currency
For decades, travellers have been looking for the best way to get more bang for their holiday buck.
It’s understandable as you've probably already spent a fair chunk of your annual wage just getting there in the first place.
Carrying a lot of foreign currency around with you is a risky business as it is almost impossible to replace if you lose it - even if you do strap it round your waste with a 90s style bum bag.
Using a credit card abroad has also proved tricky for a number of reasons. Firstly you may incur extra charges for using your card in other countries and secondly, depending on your credit limit, it can be tempting to blow the budget and face the music later on.
That’s why the prepaid debit card has proved popular with many UK holidaymakers.
Prepaid Debit Cards
About Prepaid Cards
A prepaid debit card allows the user to load a certain amount of their chosen currency onto their card before travelling.
This way they avoid costly charges for using their card abroad and aren’t at the mercy of fluctuating currency conversion rates.
Prepaid cards can be used for purchases or to withdraw cash from ATMs without any additional charges.
Using Prepaid Cards Abroad
Due to the fact that many tech banks like Monzo offer these types of cards, they have proved very popular with travellers under 30.
However, the big banks have followed suit and even the Post Office now offers a prepaid debit card specifically designed for use abroad.
Critics of prepaid debit cards claim that they come with high loading fees and other charges. Also, not all outlets abroad will accept them.
Car hire companies, for example, will require to pay using a standard debit card or credit card as they usually require to have up to £500, in addition to the price of the rental, in your account as security.
However, where prepaid currency cards do give you an advantage is at ATMs. When you use your normal card abroad, you'll probably be charged by your bank for doing so. Then you’ll be hit with an additional foreign currency charge and to top all off, you're likely going to have to swallow a very uncompetitive exchange rate.
While prepaid cards offer a cost-effective way of spending money while abroad, and can also be handy for budgeting, they do have their limitations.
Also, many banks have greatly reduced or even scrapped charges for using your credit or debit card abroad.
What’s certainly true is that holidaymaker have much more choice and flexibility available to them about how they spend their holiday money than they did in the days of traveller’s cheques and the chances of coming home with a pocket full of foreign changes jangling about in your pocket are as low as the evening sun over the Mediterranean.