Are there any drawbacks to "travel money cards"?

Question

The cards I'm asking about are sometimes called "travel cards" or "prepaid cards" or "forex cards". I don't know if there is one universally accepted name.

I have never used one because I believe they are not suited to my style of travel, but maybe I'm wrong about that.

I believe you pre-load them with amounts of money in one or several foreign currencies.

I believe that many banks in many countries provide them but that places other thanks banks sometimes also provide them.

I cannot find the Wikipedia page or even decide what is the most usual term. But here is the link for the card of this type that my bank here in Australia provides, as one example for those who need more info about what I'm talking about. And here is a Quora question about them where I learned they are also called "forex cards", which I have used as a new tag since "travel card" is obviously ambiguous.

My actual question about them is:

When are these cards not suitable for travellers? Do they have any down sides?

Answer 1

These cards are made for travelers who have the cash and do not need to "borrow" money from the bank using a regular credit card, but they want the benefits of credit card in terms of ease of use and acceptance.

Having said that, comparing them to credit cards does not make sense. The better way is to compare them to debit cards.

I have used this exact type of cards from three local banks in the past few years, and I am happy with them. They are safer as I only load them with the expected amount I think I'd need, the availability of multiple currencies makes the exchange rate perfect. However, the local banks in my country adds a small % on top of the exchange rate as "fees", this is the only down side I can think of, but on the long run I think they are OK, it will save me from the temptation of not paying my credit card bills and paying the minimum due which will make the bill higher.

Also, losing the card is not a problem, as you can login to the bank online and move the amount to your current account and then use your debit card.

Bottom line, check the rate for exchange using these cards and if there's any hidden fees that aren't available with normal credit cards issued by the same bank.

Answer 2

When are these cards not suitable for travellers? Do they have any down sides?

To begin, the same downsides that happen if you use a prepaid card in your own town instead of your regular card.

• You have to carry an additional card in your wallet, and you have to remember to use the right card in the right place. (Many apps like Uber make it slightly cumbersome to switch cards, usually exactly when you're already running late.)
• You have to load the card with the right amount of credit prior to use, and remember to keep it appropriately topped up. (It's not a cool look to fail to pay the restaurant bill and then spend ten minutes fiddling with your phone in an area with no cell coverage trying to move some money between accounts.)
• It's not always possible to move the unspent quantum back to your regular account.
• Hotels and car companies often place large holds on cards. For a credit card (or a debit card backed by a current account) that is irrelevant. For a prepaid card that can mean finding quite a bit of collateral and tying it up on the card.
• Reduced or non-existent consumer protection: usually no chargebacks.
• Absence of points or reward schemes. That hotel bill can earn a lot of cashback!

For me this is already a huge downside over just using one of my regular credit cards.

In addition, for these prepaid travel cards,

• Some cards require the currency to be fixed in advance, or are fixed by physical card.
• The exchange rate is usually quite bad compared to the market spot rate. Availability of good cards differs, but in the US and UK you can obtain credit cards that match the Mastercard or Visa network rates.

To me it offers no advantages at all and I wouldn't consider using one.