Prepaid cards are starting to boom in the UK, with the travel market proving to be extremely popular. Most currency exchange companies, such as Travelex, ICE and CaxtonFX, offer what are known as currency exchange prepaid cards, but do they provide consumers with better terms than travel agent prepaid cards?

Currency exchange prepaid cards

Travelex Cash Passport

One of the currency exchange prepaid cards available is from Travelex and  is available in seven different currencies (United Kingdom (Globe) Pound, Euro, US Dollar, Canadian Dollar, New Zealand Dollar, Australian Dollar and South African Rand), making it easier to avoid paying commission because you are less likely to be in a country outside of your card currency.

The Cash Passport Globe Prepaid Card from Travelex would be loaded with the ‘United Kingdom (Globe) Pound’ and can be used anywhere in the world. Your transaction would be converted to the local currency (at that day’s exchange rate, determined by MasterCard) when it is used abroad and you would be charged one flat usage fee of 1.49% and there’s no Travelex exchange mark up cost involved (99p fee when the transaction is in British Pounds). According to Travelex “it is typically more cost-effective that using a credit or debit card abroad, saving you on average around £1.50 per transaction”.

Should you choose one of the other six currency cards available and end up in a country outside of your card’s currency, for example you are in Spain but have a US$ Cash Passport, you can still use it. The amount loaded onto the card will automatically be turned into the local currency at the rate determined by MasterCard on the day of transaction, with an additional 5.75% commission fee. When loading the card, Travelex allow you to lock in your exchange rate (at the time of writing this was €1.0945 and $1.5805) with 0% commission when used in the same country as the card currency.

The Cash Passport offers free ATM withdrawals and purchases, although it does apply a small charge if the card has not been used for 12 months. There is also a ‘cash over the counter fee’ of £4, or the country’s currency equivalent.

CaxtonFX Traveller Card

There are currently three CaxtonFX currency exchange prepaid cards: a global one, one for Europe and one for the US. Just like the Travelex Cash Passport, when you are in the same country as the card currency, i.e. Germany with a Europe Traveller Card, there are no fees, charges or commission on ATM withdrawals or store transactions.

To get cash over the counter it’s a little more expensive with CaxtonFX as they charge the equivalent of £4.50 + 2% of withdrawal amount. However, this charge can easily be avoided by taking advantage of the free ATM withdrawals. CaxtonFX’s mark up on a transaction in a country outside of the card’s currency is 2.75%, much less than Travelex’s 5.75% commission.

So, as a general rule, currency exchange prepaid cards are free to use in the country of the card currency, with fees and charges applied for additional services (e.g. cash over the counter or when the card is used in a different country).

Travel agent prepaid cards

The only two travel agents in the UK currently offering prepaid cards are Thomas Cook and Virgin Holidays. It’s now time to see how they stack up against each other and the currency exchange prepaid cards.

Virgin Prepaid Travel Money Card

Virgin offers travel agent prepaid cards and customers can choose from either a Euro Card or US Dollar Card. However, if you’re travelling elsewhere you will need to be aware that commission is likely to play a big part, just like with currency exchange prepaids. Let’s start with that: cash withdrawals outside of your card currency cost €1.50/$2 (plus 3.5% of the withdrawal) and transactions in a different country cost 3.5%. This is less than the Travelex card (remember, six different currencies) but more than the CaxtonFX.

Now on to countries of the card currency, where you are most likely to be using the prepaid card – cash withdrawals still cost €1.50/$2, although transactions are free. This is a relatively high mark-up compared to currency exchange prepaid cards which both offered free ATM withdrawals.

When loading the card with funds, MBNA is responsible for the exchange rate for the conversion – which is based on MasterCard – but you will be informed of the total US Dollars or Euros you have loaded before you confirm.

Thomas Cook Cash Passport

Thomas Cook’s travel agent prepaid card seems to be based on the Travelex card as it is also available in six different currencies. There is one major difference though – Thomas Cook charges more; a lot more.

For example, ATM cash withdrawals using this card cost the equivalent of $2.50 although merchant transactions are free. When using the card in a country outside of its currency they use the exchange rate set by MasterCard but add on an additional 5.75% and the cash withdrawal/transaction standard charge. They also apply a charge for not using the card within 12 months.

When you compare prepaid travel cards you will find that the travel agent prepaid cards are more expensive to use than currency exchange prepaid cards because the travel agent cards implement an additional flat fee for ATM cash withdrawals. The remaining charges are the same or very similar.