Travel Money – Cash, Credit Card or Pre-Pay Card?

You have your flight and hotel booked; car hire sorted out; parking at the airport reserved… Hmm what have you forgotten…?  Yes, of course, travel insurance!  But, wait, there’s something else… Travel Money! It’s often the last thing we think about and it’s always a dilemma figuring out how much to take and the best way to take it.  (How do you carry your travel money?  Please feel free to add comments and share any useful advice or tips with our customers).  

My most recent trip was a short one and easy to organise. I purchased enough Euros to last for the trip and also took a ‘nasty’ credit card for emergency use.  No matter where you’re going, or what type of holiday, you’ll always need cash in hand. It’s a mistake to wait until you arrive at the airport to think about changing money as the exchange rate will not be favourable at those kiosks!

Several companies offer decent exchange rates and you can even order your foreign currency online in advance and pay for it with a credit or debit card. If you have to withdraw cash from a credit card while abroad you’ll probably get hit with charges and costs, such as loading fees which your bank charges for converting the money – a percentage of the total amount withdrawn - typically about 2.75%.  Plus you will likely get hit with a ‘transaction fee’ for each withdrawal. 

I miscalculated and ran out of cash on my last day.  I didn’t need that much more but was forced to use my credit card to access extra funds, which was annoying but very simple to do at a bank cash (ATM) machine.  I remembered the advice I’d read somewhere to take out larger sums to avoid being hit with transaction charges for each withdrawal. The fee is usually in the region of £2 or two percent.  Another drawback with using credit cards to withdraw cash is that interest is usually charged from the date of withdrawal.  However, in my case, I was so glad I had that extra cash in hand as the bus I’d planned to catch to the airport didn’t show up and I had to pay dearly for a shared (and much in demand) taxi or miss my flight!  I certainly had not anticipated a last-minute snag like that, so it just goes to show you can’t be too careful and should never leave yourself short of cash. 

Pre-pay travel cards are becoming popular and may eventually make traveller’s cheques obsolete.  It’s a safer option as you can ‘load’ the card with the amount of currency of your choice and don’t have to worry about having those precious credit cards stolen and your bank account exposed to fraudsters.  There is a fee for obtaining a pre-payment card and also for using the card so you must decide if this is the right option for you.  They can be loaded with U.S. Dollars, Sterling or Euros.

The Post Office pre-pay cards start at £250 and can be topped up. The pre-pay cards can be used in shops or restaurants, just as you would pay with a credit or debit card.  The best feature of pre-pay cards is that they are not linked through to your bank account in the event your cards fall into the wrong hands.  The main drawback seems to be that even though you still pay fees for using this method (just as with credit or debit cards) you have no protection under the Consumer Credit Act if there is a problem. 

If you decide on Traveller’s Cheques you can rest assured that you’ve made a good choice.  However, do some research into your area of travel to ensure that you’ll be able to exchange the cheques.  In some remote or rural areas the banks may not accept them.  You may also be hit with a fee for the privilege of cashing the cheques.  No matter which method you choose, the banks are going to get their share of your hard-earned cash one way or another!

Obtain a quote for your travel insurance here.