The history of traveler’s checks dates back over 200 years. They were originally designed for use in European countries but are now available in many currencies and are accepted worldwide. Traveler’s checks have over many years been one of the easiest and safest ways to carry money abroad. They are pre-printed for a fixed sum and may be used like any other check. The value of the check is guaranteed, providing you adhere to the conditions.
Modern technology has changed the way we pay for goods and services, and debit and credit cards account for in excess of 90% of transactions when traveling overseas. We are, in effect, lost without plastic payment cards. The good thing about traveler’s checks is that you pay for them in advance, which helps with budgeting when traveling. You know the amount you have allocated for your travel and even if you do spend every check, you won’t be returning home to a large credit card bill and the associated interest charges. With plastic cards, you always have to be on your guard for the additional fees and charges associated with cash withdrawals, especially from an ATM. Getting cash from an ATM using a credit card usually means you get charged a withdrawal fee, with interest charged on the amount withdrawn from the first day until the total amount is paid back.
Everyone gets that care-free feeling when on vacation and credit cards can be tempting. Now there’s a way to get all the benefits of a credit card and all the benefits of travelers checks without the downside: get a pre-paid currency card.
The pre-paid currency card market is booming. They were first issued to assist people with poor credit ratings who couldn’t get approved for a credit card, but now they are also used instead of traveler’s checks, with many preferring the convenience of a plastic card rather than a bundle of checks. They are safer than cash and you get the same purchase protection as with other credit cards. Replacements can easily be issued in the event of a card being lost or stolen.
Pre-paid currency cards can be used in exactly the same way as a regular credit card. They have the usual symbols, such as MasterCard or Visa, and can be used to pay for goods and services worldwide. Anyone can get a pre-paid currency card as there are no credit checks. You simply top your card up with as much money as you want (there are some limits) and you’re free to spend it as you wish.
Pre-paid cards can be issued in many currencies such as US dollars, Canadian dollars, Euros, and GBP. You apply for a card in the currency you want and top it up with your local currency for conversion to the currency of your choice when you need it. For example, if you’re traveling to Europe then get a pre-paid euro currency card. This means that while you are in Europe you pay for items in Euros and don’t have to worry about exchange rates.
There is usually an application fee and some issuers charge a monthly fee. Topping your card up is often free (small charges may apply). There are no charges associated with using your card unless you get cash from an ATM. However, unlike a credit card, if you get cash from an ATM there are no interest charges as the money is yours, not borrowed.
One area where pre-paid currency cards can cause a problem is if they are used in hotels or for car rental. When you check-in to a hotel or rent a car, the company will apply to the card issuer for a security deposit. This can be a reasonably large amount. Once the security deposit is approved the amount is held by your card issuer as a promise to pay the company. It means that the amount is taken from your card balance and until it is released you cannot use it. You need to take account of this as potentially it could mean you don’t have enough left on your card to pay for other items. The simple answer is not to use your pre-paid currency card for hotels and car rental, but to use it for everything else.
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