Foreign Perspectives

Prepaid cards seem to be breeding like rabbits around the world and every single one is different from the others in terms of charges, features and general useability.

Rather than trawl through all the cards that would pay me to recommend them to you as the majority of card comparison sites do, I’m just going to go through those that are “best” here and tell you why that they’re the best so that you’ll be able to choose which is best for your circumstances.

At the moment there are basically three types of card available:

1. Maestro cards;
2. Visa Electron cards; and
3. Mastercard debit cards.

All of the Maestro cards seem to charge you for the card and a number of them charge you an annual fee too for a card which is very limited in functionality. Therefore, it isn’t worth considering these any further.

At the moment there seem to be only two Visa Electron cards available aimed at the holiday market which is a shame as it’s a very useable card. The Post Office card is free to get, £5 to renew and costs £1.50 per UK withdrawal, £2 overseas; if you get the Euro or Dollar cards their “0% commission” works out at around 3.5% otherwise it’s 2.75% when you use, say, the dollar card in Europe. There’s a 1.5% charge to add money to the sterling card. The LloydsTSB costs £7.50, £5 to renew and costs £1.50 per withdrawal with a 2.75% currency exchange fee when used abroad; on the Euro or Dollar cards their “0% commission” should work out at a similar charge to the Post Office card (they don’t offer a sterling card). That £7.50 initial charge (waived if you have a LloydsTSB Silver account) and much wider availability means that the Post Office card will be best for most people.

The range of Mastercard debit cards is vast. The majority of these cards have a monthly or annual fee which makes those ones very expensive which is a shame as this is the most useful of the three types of prepaid card currently available. However, the FairFX card is free if you load £500 or more onto either their Euro or dollar cards or alternately via this link for £10 upwards (it’s £9.95 for a three year card otherwise) and costs £1/€1.50/$2 to withdraw cash (there’s no transaction charge for purchases). The card is renewed free if you top it up at least twice over the three year validity of the card, otherwise it’s £6/€9/$12. The ICE card is free to issue from £100/€100/$100, £1.75/€3/$3 to withdraw cash and charges 4% for all currency conversions. It’s renewed free if your balance on the card is at least £50 when renewal time comes up otherwise it’s £3/€5/$5. They charge £1.75 per purchase transaction when you use the sterling card in the UK but the euro/dollar cards are free to use for purchases everywhere and the sterling card is free to use everywhere except the UK for purchases. Purely on the published charges this makes the FairFX card the one to go for but it’s even better than that as they only charge about 1% for currency exchange.

So, which of all of these cards should you get?

1. The very clear winner is the FairFX card which is free to issue via this link, £1 per cash withdrawal and about 1% to convert the money to euros/dollars. If you load your card at least twice every three years (the topup when you get the card to begin with counts), renewals are free otherwise they’ll charge you £6. Topups are via debit card or bank transfer; in theory you can topup via credit card but FairFX charge you 1.5% to do this and you could get hit by cash advance fees from your bank too if you do this.
2. In second place comes the ICE card which is free to issue and renewed free if you have at least £50 on the card at renewal time, £1.75 per cash withdrawal and 4% to convert the money to euros/dollars. You can top-up online by credit/debit card or in their branches with cash, cheque or credit/debit card.
3. In third place comes the Post Office card because it’s free to issue, £5 every two years to renew, £2 per cash withdrawal and about 3.5% to convert the money to euros/dollars. You can top-up the card with cash or credit/debit card in a Post Office branch or by phone or online with a credit/debit card. The big plus point of this one is that you can get it immediately from a Post Office branch so if you’re looking for a last minute card before you head off on holiday, this is the one to go for although do bear in mind that the card needs to be activated before use ie you can’t get one in the Post Office in the aiport, get on the plane and use it immediately in the resort.

What would I get myself? The FairFX card in that the charges are so low. This is a truly exellent card and if you remember to topup twice every three years it’ll not cost you anything to operate. I’d also consider the Post Office card in that it’s useful to have both Visa and Mastercards as not everywhere takes both and you could come unstuck if you only took one.

For true emergency use the Post Office card comes into its own as you could get someone to get one for you in the Post Office and post/courrier it to you whilst you were on holiday.

You should consider these cards only as backup to your normal credit/debit cards. For use abroad, the best bet remains the Nationwide Building Society‘s Flexaccount (Visa debit or Cirrus) which has no charges at all for withdrawing cash or converting from sterling to any currency. Alternatives to this are Abbey’s Zero Card (Visa or Mastercard) which appears to be even better than the Nationwide offer. Other credit cards with no foreign exchange fee include Thomas Cook (Mastercard), the Post Office (Mastercard) which charge nothing where-ever you are and Saga which charges nothing in Europe and 1% outside. Finally there’s the Egg Money card (Mastercard) which charges 2.75% for currency conversion but has no transaction charges for cash withdrawals and pays a quite respectable rate of interest when the account is in credit; it’s an excellent choice if you like to budget your holiday spending as you can use it like a savings account.