How to tell a good prepaid travel card from a bad one

If you’re planning an overseas holiday chances are you will come across the prepaid travel card and wonder if it is worth getting one. You can get them from major banks, travel agents, the post office and even from online foreign exchange specialists. But what we have found is that not all prepaid travel cards are created equal and depending on where you’re travelling to, they could be the most expensive way to spend your holiday dollars.

So here is a look at some of the key features of prepaid travel cards, also sometimes called prepaid credit cards, and how to make sure you choose the right travel money option for your trip.

What are prepaid travel cards?

Prepaid cards are basically an updated version of the travellers cheque. Just as you would pre-buy your foreign currency travellers cheques, with a prepaid card you purchase foreign currency at a set rate before you travel and instead of paper cheques you’ll get issued with a prepaid Visa, MasterCard or American Express card. You can purchase single currency cards or multicurrency cards which allow you to preload multiple currencies on the one card.

One of the best advantages of a prepaid card is that you can lock in your exchange rate so that when you are travelling you’ll know exactly just how much things are costing you. You can use prepaid cards in ATMS or pay for things like restaurant bills, hotels or shopping wherever you use MasterCard, Visa or Amex.

Here are our top tips for getting the best card for your trip.

  • Only get a prepaid card if you can preload the currency of the country (ies) you are visiting. Going to Fiji, Bali or Mexico? Forget prepaid cards. A prepaid travel card would be an expensive holiday money option as you will be required to pay a cross currency conversion fee for every purchase you make and depending on the card this can be as high as 8.45% (Cash Passport / Travelex). Opt for a credit card or debit card that has no international fees like the 28 Degrees MasterCard or the Citibank Transaction Plus Account.

  • Variable purchase fees. If your travel money budget is bigger than $1500 avoid prepaid travel cards that have a purchase fee which is a percentage of the load as this increases the cost of the card.

  • Use Mozo to compare exchange rates. Each bank has different exchange rates and what you’ll find is that ANZ may have a better rate for NZD but NAB has a better rate for Pounds. OzForex has recently reduced its exchange rate margin and is now offering the best exchange rates for prepaid cards in the market (Update: OzForex are no longer processing new travel card applications). See today’s rates for all cards here.

  • Reloads. All prepaid cards are reloadable so if you’re midway through your trip and you want extra funds you can add more to the card. There are two things to be mindful about with reloads, most cards (except Australia Post Load&Go Travel) will charge you a fee between 1 – 1.1% for reloads. The second thing is that reloads are not instant. It can take up to 3 business days for your funds to turn up on the card so budget accordingly.

  • Spending habits. If you will be using ATMs regularly choose a card like the Cash Passport or NAB Traveller Card that doesn’t charge for ATM fees.

  • Watch default currency order on multicurrency cards. You really only need to watch this if you plan to reload extra money on the card during your trip. Multicurrency prepaid cards have what is called a default currency order. Say you have the ANZ Travel Card loaded with Euro and HKD and in Hong Kong you wanted to buy an extra AUD2,000 worth of HKD. If you don’t change the default currency to HKD before the reload, you would automatically load Euro onto the card as this currency is higher in the default currency order. You would then either have to pay a 3% cross currency conversion fee on your purchases or convert all the funds to HKD and loose out on the exchange rate again.

  • Holiday budgeting. Prepaid cards are great if you have a set travel budget but often it means that you will come home with some foreign money still on the card. To recoup your cash, you can withdraw it from an Australian ATM but you’ll pay the cross currency conversion fee to convert the money back into Aussie dollars. Other options include  doing some online shopping or saving it until your next trip. Just beware that if you do the latter, some cards do have a monthly inactivity fee so to avoid this you will need to do a ‘balance enquiry’ at an ATM as this counts as activity and the fee won’t apply.

Here’s a snapshot of the major travel cards and how they compare on fees:

ANZ Travel Card

CBA Travel Card

Australia Post Load & Go

Cash Passport

OzForex Travel 

NAB Traveller Card

AMEX Global

Purchase Fee

$11

$15

$0

$5

$15

1% of initial load (waived until June 22)

$15

ATM fee

Yes

Yes

Yes

No

Yes

No

Yes

Transaction fee for purchases

No

No

$0.09 per transaction, max $0.99 per 30 days

no

no

no

no

Reload fee

Yes

Yes

No

Yes

No

Yes

Yes

Cross currency conversion

3%

0%

3%

8.45%

5.45% (AUD)

3%

4%

3%

Close fee / inactivity

$3 monthly inactivity

$0 close fee

$0

$15

$10

$4 monthly inactivity

$10

$0

$0

#1 Default currency

$AUD

$USD

AUD

$AUD

$AUD

$AUD

$USD

Minimum load amount

$200

$0

$100

$0

$100

$50

USD $200,

$100 GBP, $150 EURO

 

How to tell a good prepaid travel card from a bad one was last modified: August 24, 2015 by Mozo

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11 Comments - Write a Comment

  1. What if you top up your card with too much foreign currency and are left with let’s say 200 pounds on the card. What are the costs of converting it back to AUD?

    Anders

    Reply
    1. Kylie Moss

      Hi Anders, to convert your funds back you can either cash out your card or use your card at an Australian ATM. If you choose the ATM option you may have to pay an ATM fee as well as any cross currency conversion fees which can be 0% – 5.45% depending on the card you purchased. The rate that you are charged to exchange the pounds to AUD is the banks foreign currency to currency rate for that day. If you cash out the card, you won’t have to pay the cross currency conversion fee but you will have to convert your money back into Australian dollars at the exchange rate that day so you will effectively pay a foreign exchange margin twice. Team Mozo

      Reply
  2. When i was travelling from India i got hold of a ICICI travel card and carelessly i didn’t notice the expiry date May 2013 of the travel card. After i came to Australia , i thought i will withdraw after a few days and that was a mistake . By the time i wen to withdraw it was June 2013 and the card was blocked. Gosh !!!
    I got hold of the terms and conditions and they had mentioned that a replacement card will land in my hands in 48 hrs . I applied and u know what its been 96 hrs and i am still waiting for the card. It was BlueDart + DHL combi and along with ICICI they screwed my happiness.
    So beware . don’t take ICICI bank travel card.

    Reply
    1. Kylie Moss

      Hi, none of the prepaid travel cards in the market will let you preload Indian Rupee so a prepaid travel card would not be a good option as you’ll pay high conversion fees on each transaction and withdrawal. Try getting a debit card like the Citibank Plus transaction account which doesn’t charge overseas fees. The Bankwest Rewards Transaction account also doesn’t charge overseas ATM fees (which can be as high as $5 a pop) but with this card you will get charged a 2.95% foreign exchange fee on purchases and ATM withdrawals. If you are planning on mostly using ATMs then one of the best ways to save on fees is to withdraw higher amounts out at each time.

      Reply
  3. I am currently using a comm bank Travel card in Thailand loaded with Thai baht. Getting charged cross currency fees 900 baht for every 10000 withdrawn + 80 baht ATM Fee. The card is not worth using may as well use my debit card.

    Reply
    1. Mozo

      Hi Hanah,

      Thanks for asking such a great question! Technically, you can use a prepaid travel card for pre-authorisations at hotels and car hire companies but we wouldn’t recommend it. If you use your prepaid travel card during check-in, these funds can’t be used until you settle the bill. For example, if you loaded $1000 to your travel card and the pre-authorisation amount was $200, your balance of available funds would immediately drop to $800 until you settled the bill. Also, when compared to credit cards, there is a longer delay for the pre-authorisation funds to appear back on your pre-paid travel card.

      Reply
  4. We have pre loaded in US dollars, the NAB card. Will we have any problems using it in the states, for hotels, car hire, purchases?? My daughter took hers to France and could not use it at all

    Reply
    1. Kylie Moss

      Hi Carolyn,

      You should not have problems using the card in the US as it should be accepted anywhere that Mastercard is accepted. We’ve heard of stories where prepaid cards can’t be used for ‘holding deposits’ at car rentals etc’ but as long as the transaction is done there and then you should be able to use it anywhere. But it is always a good idea to have a couple of travel money options just in case you run into issues. I was recently in the US and a couple of times my credit card didn’t register with the retailer (more the retailer’s card technology than issues with the card) so I had to pay in cash.

      I hope you have a great trip
      Kylie

      Reply

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