Prepaid travel cards have become highly popular over the last 12 months and are fast becoming one of the preferred payment methods for British tourists while travelling abroad. Prepaid cards provide travellers with additional security measures compared to cash and traditional credit or debit cards, and are available in many currencies.

These advantages over more traditional methods of payment have seen the number of prepaid travel cards soar, but are UK tourists paying more money for the privilege of using one? Prepaid cards do often incur fees and charges for withdrawing cash at ATMs and making purchases, particularly when used in the UK, but is this all consumers are paying for?

Prepaid currency cards are available here in the UK in a wide variety of foreign currencies, allowing consumers to travel the world with little worry about accessing their money. The most common prepaid travel cards are those available in the Euro and US Dollar but there are cards which cater for less popular currencies too, such as the South African Rand and the New Zealand Dollar.

Prepaid card exchange rates

Prepaid card exchange rates can vary greatly depending on the card provider but we will use a few of the most popular cards as an example.

Travelex claims to “check the exchange rates of the major banks and high street retailers to ensure we give you the best overall price on your foreign currency – or we refund the difference – that’s the Travelex online promise”.

However, it seems that this promise does not apply to its prepaid card exchange rates because it doesn’t apply to services offered in conjunction with a partner company, when orders are placed on the cashpassport.com website or when a Cash Passport card is being reloaded.

Despite this difference, by following the steps on the Travelex website I can purchase €570 as cash or on a new prepaid card for £516.30 – making the exchange rate for both 1 GBP = 1.104 EUR.

The CaxtonFX Europe Traveller prepaid currency card has been voted the holidaymakers’ favourite card but does it live up to expectations when you compare exchange rates? CaxtonFX proudly displays its exchange rates on the homepage of its website, with today being 1 GBP = 1.1100 EUR, turning £516.30 into €573.09.

The Virgin Prepaid Travel Card is a Visa card available in Euros and US Dollars.  While Virgin doesn’t make any claims about guaranteeing the best exchange rate, it does claim to be competitive. The website allows you to view the exchange rates when you apply for the card, which were 1 GBP = 1.0730 EUR, turning £516.30 into €553.99 – clearly the worst value for money out of our top three prepaid currency cards.

Other exchange rates

Before prepaid travel cards came about, most UK tourists visited the bank, travel agent or Post Office to buy foreign currency and traveller’s cheques before going on holiday. Are these places now able to offer the ‘competitive’ exchange rates that they boast? Consumer Focus doesn’t think so, and it has managed to persuade the Office of Fair Trading (OFT) to investigate the hidden charges involved in buying currency.

Mike O’Connor, chief executive at Consumer Focus, said: “Converting £500 into euros can cost from less than £10 to more than £30 depending on where you switch your money. This is a huge difference for essentially providing the same service and, typically, banks offer the worst deal.”

Sainsbury’s Bank, which offers currency exchange in the larger Sainsbury’s stores as a convenience to customers who wish to do their shopping and pick up their Travel Money is currently offering an exchange rate of 1 GBP = 1.1041 EUR, offering me €570.05 for £516.30, €3.04 less than the CaxtonFX Prepaid Card.

The trusty Post Office, winner of Best Foreign Exchange/Travel Money Retailer at the British Travel Awards 2010, is able to offer holidaymakers €569.94 for £516.30 cash today at an exchange rate of 1 GBP = 1.1039 EUR, which is €3.15 less than the CaxtonFX card.

Perhaps HSBC ‘the world’s local bank’ will be able to prove the chief executive of Consumer Focus wrong. Using the website’s currency calculator it was found that £516.30 would buy UK holidaymakers just €550.50, with the exchange rate sitting at 1GBP = 1.0662 EUR. This result is the worst overall, achieving €22.59 less than the best option, the CaxtonFX Prepaid Card.

Let’s see how that all looks in a table (Exchange rates correct at time of writing at 10am on 28th October 2011):

Prepaid travel cards prevail

We have found that, in general, prepaid card exchange rates are very competitive compared to the other options on the foreign currency market, although there are some which don’t offer the same great rates as others.  In order to ensure that you get the best value for money when travelling abroad, check out a wide variety of sources for your foreign currency.

Although prepaid travel cards are a modern alternative to more traditional payment methods there is no need to be sceptical about their rates. These prepaid currency cards are accepted at millions of locations worldwide, and they do offer so many benefits which you cannot find with cash and traveller’s cheques.

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Post Author: Marghaid Howie, Gas and Electric Reporter

Nearly a third of UK households are facing fuel poverty in the event of a predicted harsh winter, according to new research.

The independent price comparison website Energyhelpline.com forecasts that energy customers will have to stump up an average £564* to pay their heating bills from December to February if the period is colder than average.

At present, there are 6.4 million UK homes in fuel poverty – where people have to spend more than 10% of their income on their domestic fuel bills.

However, the plummeting temperatures and rising prices could push a further 1.9 million homes over the edge so that 8.3 million of the UK’s 26 million households are hit.

This means that only homes with a combined income of £30,000-a-year – just £3,000 short of the average – will be able to avoid the fuel poverty trap.

Mark Todd, director of Energyhelpline.com, said: “These figures reveal the shocking extent of how many people are going to struggle to pay their energy bills this winter.

“The nation is looking to David Cameron to take a lead on this and people will not forgive him if all that comes from the Downing Street summit is a load of hot air.”

The shock research came as a summit meeting was held between the Government and the “Big Six” energy companies to discuss ways consumers can save on their gas and electricity bills.

A combination of high domestic energy costs and harsh weather could leave the UK with a staggering national fuel bill of £14.7 billion for the December-February period compared with £11.8 billion for the same period last year.

While tariff complexity does create confusion, the fact that 75% of customers are still on standard tariffs is the main reason why so many pay high bills. It also explains why switching can save customers so much money. Many people are surprised to learn that they could chop off around £300 from their dual- fuel bill by taking just a few minutes to switch through a price comparison website to a fixed tariff.

* The calculation of £564 is based on the average UK gas and electricity bill, as calculated by OFGEM, at £1,345 a year and a 20% in typical usage of electricity and gas through December-February due to bad weather. From December-February, consumers use 30 per cent of their annual electricity usage and 40 per cent of their gas usage. The average annual gas consumption is 16,500 kWh and an average annual electricity consumption is 3,300 kWh.

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If you’ve ever wondered how the UK credit rating system works, then you’re not alone. On average 165,000 people in the UK search online each month for the phrase ‘What is Credit Rating?’. What’s more, there are countless posts in forums from consumers asking credit-related questions, which are often answered completely incorrectly.

aqua card, a specialist lender for people with bad credit, has created an infographic which aims to clear up all the credit confusion. The infographic, aptly named ‘What is Credit Rating?’, explains what makes a credit applicant a high or low risk borrower and what banks and credit providers really know about you. To help consumers on their way, the graphic also includes a five-step checklist with tips on how to improve your personal credit score, with tips including using a credit card and managing it responsibly, and making sure you’re on the electoral roll.

Emma Davis, an online manager at aqua card, says: “We realise that lots of complex financial copy on a webpage can be overwhelming for customers, so creating an infographic was the perfect way to explain a detailed topic in a clear and concise format.”

The launch of the graphic comes at a time when credit is extremely prevalent in the news. In October 2011, Credit Action, a leading UK debt charity, revealed that the average amount owed by every UK adult is £29,546 (including mortgages). The debt charity also found that, as of the end of August 2011, the average UK adult has borrowed £4,257 using credit cards, motor and retail finance, overdrafts and unsecured personal loans. In addition, Credit Action calculated in October 2011 that 334 people every day of the year will be declared insolvent or bankrupt – the equivalent to 1 person every 59 seconds during a working day.

With this in mind, it seems that now, more than ever, UK consumers need to ensure they are informed and, if not already, working towards manageable debts.

Here’s the infographic:

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Is the UK starting to get back on its feet after the recession of 2008 – 2009 or is the situation still as perilous as ever? If this video by debt management company Payplan is anything to go by, there is still a long way for the UK to go in order to get its personal and public debt back under control.

While many people may not want to hear how far the UK has to go to recover financially, nor hear all the talk of how the worsening EU debt crisis could possibly cause a double-dip recession, the facts are laid bare in this thought-provoking video.

The purpose of publishing this video on the site is to make our readers aware of how bad the debt problem really is because, at the end of the day, in order to fix the problem we need to know the extent of what we are dealing with. The video is particularly explicit when it comes to personal debt which could result in many of you being surprised by the sheer scale of the existing issues.

The video starts by asking “do you think the UK debt problem is under control?” and proceeds to answer the question in brutal fashion starting with the state of the UK’s public finances. It then moves on to the facts about the current levels of credit card debt and the levels of insolvencies, bankruptcies and County Court Judgements (CCJs) that are being dealt with every single day in the UK.

In a powerful finale, the video then goes on to give the amount of national debt that will be accumulated, the amount of purchases that will be made on credit cards, and the amount of interest that will be accrued simply in the time it took to watch the video. If the aim of the video was to highlight the sheer scale of the debt problem that still exists in the UK then this aim has certainly been achieved.

Take a look at the video to see for yourself and if you like it you can use the code below to embed it on to your own website.

Source: Payplan – IVA and Free Debt Management Plan provider

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Watch our video from Sainsbury’s Finance to find out why trying to save money with DIY or rogue tradesmen could end up costing you more money in the long term

Those of us who enjoy home decorating know there’s nothing like being able to save a few pounds here and there with a bit of DIY. But, while trusting yourself to paint a bedroom is entirely reasonable, are we taking risks when it comes to the big stuff?

When it comes to the electrical, plumbing and gas work on your home, if you are not 100% certain of what you’re doing, you could be opening yourself up to a variety of serious problems. Making sure your home insurance covers you and that you employ the right builders to do the jobs you can’t is a big must.

A new study by Sainsbury’s Finance shows that Brits have wasted a overwhelming £4 billion in the last five years rectifying dodgy building, electrical, plumbing and gas work, done by disreputable tradesmen. But not only are these substandard jobs causing years of grief for homeowners, they are also invalidating home insurance policies, leaving unsuspecting homeowners at huge risk when making claims.

In the following video, Michael Holmes, Editor of ‘Real Homes’ Magazine takes you through what corners you shouldn’t cut when it comes to renovating and how to identify whether you are using a qualified tradesmen that you can trust to do the job. Ben Tyte, Head of Sainsbury’s Home Insurance, will also give you tips on how to make sure you’re covered from the start of your renovation right through to when the job is done and dusted.

For more information on Sainsbury’s Home Insurance, visit www.sainsburysfinance.co.uk

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This year has not been a good time for homeowners because we have been squeezed from just about every angle. The recently announced price hikes from the ‘big six’ gas and electric companies (British Gas, Npower, Scottish and Southern Energy, Scottish Power, EDF Energy, and Eon) have pinched our pennies even further.

Every single one of the ‘big six’ energy companies has now announced huge price increases. However, with conflicting advice on whether to fix or switch, it can all get a little complicated.

A fixed energy tariff is when the price you pay per unit of energy is fixed by the energy companies for a set amount of time so it will stay this way whether the suppliers increases or reduces their prices. To try and simplify matters for consumers, we have listed the pros and cons of locking into a fixed gas and electric deal.

Gas and electric fixed tariff pros

Fixed unit price

It is important to note that it is the unit price that the energy supplier will fix – if you use more or less energy in one particular month your bill will be affected.

Consumers should be fully aware of the unit price before they fix because, once fixed, this unit price will remain the same for the remainder of the contract – usually 12 to 24 months, but sometimes up to three years.

Protected from price hikes

The great benefit of fixed tariffs is that the fixed unit price means you are protected against any price hikes by your energy company for the period of your contract. Even if your supplier was to double its gas and electric prices your fixed price would stay exactly the same, meaning that you won’t be left out of pocket.

Long term savings

If you assume that the price of gas and electric will rise, even if only slightly over the duration of your fixed tariff, you will save money in the long term. Right now we know that the energy companies have hiked prices and could have plans to increase them again at some point – if you fix before the next price increase you could make significant savings.

Gas and electric fixed tariff cons

More expensive than cheapest deals

If you are currently on one of the cheapest tariffs, perhaps an online tariff, you will probably find that fixing right now will cost you more. It is important to remember that your online prices are about to soar by around 19% – depending on your supplier and the date it plans to implement its increases.

Fixed tariff customers will find that they are paying a premium for the privilege of being guaranteed a fixed unit price for a certain period of time. This means that there will be far cheaper non-fixed deals available on the market. Although this doesn’t pose a problem if rates start to soar – it can put you at a serious disadvantage if they don’t.

Prices may never rise

Fixing your gas and electric tariff is always a gamble as (unless previously announced) the prices may never actually go up, and could even start to go down! This means that you could be left stuck in an expensive contract paying over the average for a long period of time, unless you pay the exit fee.

High cancellation/exit fees

When you lock into a fixed tariff you are contracted for the set amount of time, which will vary depending on what deal you have signed up to. If your circumstances change you might want to leave your fixed tariff and switch to a cheaper, more competitive deal. The luxury of having the freedom to switch to your preferred supplier does come at a cost; most fixed tariffs will incur an exit or cancellation fee for each fuel. These are usually quite substantial and often make switching to a cheaper deal worthless.

Should I fix my tariff?

The recent price hikes means that there aren’t many fixed tariffs on offer any more, so if you want to ensure that you are not left paying sky high energy bills this winter, you need to make a decision now. Don’t just contact your own supplier to fix your tariff, it is essential that you find a great deal, so compare the prices of gas and electric with all of the ‘big six’ and smaller companies before locking in.

As you can see, there are both pros and cons to fixing your gas and electric tariff – whether it’s right for you will depend on your current situation.

It is important that you really think about whether you want to be locked into a deal for the long term before signing any fixed tariff contracts because you will have to pay an exit fee to switch to an alternative provider.

Consumers also need to consider that leaving fixing too late could leave you paying a higher price per unit than if you fix earlier. The disadvantages of fixed tariffs could well outweigh the disadvantages in the current climate, but this will definitely depend on your ability to absorb the soaring energy prices. If you are concerned about the increase in the cost of your energy bill there are ways to help you cut costs further, such as using less energy and changing your payment method to direct debit.

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I know I can’t believe I’ve brought up Christmas and it’s only October, but when we spend millions on gifts every single year, preparation is key. The effects of the difficult financial climate and the squeeze on the government’s purse are starting to take their toll as 39% of people plan to spend less money this Christmas.

In addition, figures from ICM Research suggest that more people are shopping online, with 73% of people claiming that they will buy the same amount or more online than they did last Christmas. A possible cause could be that the threat of bad winter weather has forced us online and away from the high street but it is more likely to be because there are significant savings to be made on the web.

This increase in online shopping means that more people are turning to plastic to pay for their goods. Therefore, consumers need to be wary and prepared because too much spending on credit cards can easily turn into a post-Christmas debt hangover.

Prepaid cards are the ideal alternative form of plastic because they can help keep you within your Christmas budget and avoid credit card debts. While it’s not a bad idea to shop with credit cards, particularly if you have plans to earn rewards and pay off the full outstanding balance immediately, this can easily turn into a bad habit, which will ultimately lead to bad debt, if you don’t have the necessary discipline.

The prepaid card market has expanded considerably in recent years and there is now a multitude of cards available all of which come with different advantages and disadvantages. The main two ways that a prepaid card could help at Christmas are with budgeting and online shopping.

Online Christmas shopping

As we have seen in the research from ICM, the number of people who are shopping online is on the rise, and is thought to continue to rise for the foreseeable future as we turn into an internet-addicted generation.

Prepaid cards are not usually linked to personal information or a bank account which means that people with no access to bank accounts or those that have bad credit are still able to shop online. Usually if you don’t have a debit or credit card you are restricted to physically paying with cash at the store, especially as the number of outlets accepting cheques is also diminishing.

Although there are no credit facilities with a prepaid card and all the available funds are pre-loaded, it opens up a new avenue for people wanting to shop online because prepaid cards are issued by companies such as MasterCard and Visa, which means they are accepted on the same sites as most debit and credit cards.

Budgeting Christmas spending

Budgeting is essential for the Christmas period; stocking fillers, selection boxes, the turkey, travel costs, decorations, gifts, cards, parties and everything else all add up.

Prepaid cards can benefit all Christmas shoppers, and not only those that choose to shop online, because they can help everyone budget for their Christmas spends. Prepaid card users can keep track of the money they are spending by using an online service provided by the card issuer, similar to an online bank statement.

Parents will be feeling the increasing financial pressures as kids expectations get higher and the cost of living increases, so how can prepaid cards help? If money is tight this Christmas, work out your spending budget, load it on to the card to make your purchases and get yourself into the mindset that once the money on the card is gone, there’s no more to spend. In a way it is similar to paying for your credit card before you even use it. Once you have spent the loaded funds, you can easily reload the card online, by mobile phone, in-store or over the phone, should you discover that you have a bit of extra money to spend (you could free up some extra cash between now and Christmas by trying to cut your household bills, for example by switching gas and electric providers).

Prepare for next Christmas

If you are extremely organised and have already sorted this Christmas, it’s not too early to start thinking about the next one. By setting aside a certain amount of your wages each month and loading it on to your prepaid card, you could have a large chunk of your budget ready for spending on the card by the time we get to October or November 2012

Prepaid cards are not the only way to budget for Christmas but they can avoid a debt hangover in the early New Year. Avoid struggling with mounting debt in January by using prepaid cards to budget for Christmas.

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With tough financial times both behind us and ahead, many people are dreading the thought of Christmas rather than relishing in the warm spirit that the holiday season brings. This year has seen some of the harshest government cuts since Margaret Thatcher was in power. Meanwhile, petrol and diesel prices are sticking at record highs, energy suppliers have hiked gas and electricity prices by an average of 19%, and there have been warnings that inflation rates could increase even further.

How will all of this impact on our Christmas spending? Will people be more inclined to tighten up their purse strings to avoid causing themselves more financial difficulty?

Christmas spending

Christmas is an expensive time of the year, and it’s not just the gifts that are costing us money; we spend a small fortune every year on the Christmas dinner, decorations, parties, going out, clothes, travelling to see family, and much more.

Research by The Co-Operative Bank found that in efforts to cut back on spending in 2011, 53% of people are no longer going out, with 14% opting to attend house parties instead, while 57% have stopped eating out. Will these habits continue through the Christmas period?

In 2008, GfK NOP established that 38% of people were going to fund their Christmas spending with credit, with another 19% using savings. The research revealed that only 65% of consumers would actually fund Christmas with their normal income. Will Brits be doing the same for Christmas 2011?

With every penny being squeezed further, UK consumers have 2% less disposable income available these days to spend on Christmas. Without having the cash in their bank accounts will consumers turn to spending on plastic instead?

December spending down

Figures from the UK Cards Association suggest that British consumers are actually wary about building up too much debt as the number of purchases and the value of spending has actually decreased every year since 2008. Credit card spending was at £11.3bn in December 2007 but last Christmas was down by 8%* to £10.4bn. In stark contrast, the amount spent on debit cards has actually increased by 18.2% (£3.8bn) over the past four years from £20.9bn in 2007 to £24.7bn in 2010.

Mark Bowerman, a spokesperson for the UK Cards Association, said: “Given the continuing economic downturn we do not expect to see an increase in the use of credit cards this December and the trend has been for people to do their spending on their debit cards rather than their credit cards.”

ICM Research found that 39% of people stated that they would be spending less money on Christmas this year than in 2010, something which was far truer for older people than younger age groups. This research, along with analysis from the UK Card Association, would suggest that more people are cutting back on their Christmas spending this year and only spending the money they have, rather than turning to alternative forms of credit.

Credit cards could help

Spending on credit cards is not as bad as some people fear, but you do have to be disciplined and stick to a budget. Most credit cards offer a grace period between the point of sale and the time you are required to start paying interest on the balance. If you pay off the balance in full before this time is up, you will not be charged any interest.

This could prove to be particularly useful if you use a rewards credit card; these cards offer rewards in return for spending on the credit card. The rewards can vary but you will typically see cashback, gift vouchers and airmiles as some of the rewards offered.

To make the most of a rewards credit card you will need to use it wisely throughout the year. By this I mean that you would need to get in the habit of using it to pay for things you would have ordinarily paid for using your debit card or cash (but only spending the money you know you have and stashing the cash to cover the cost of what you paid for on your card in a savings account), earning the rewards as you go. Then, the most important step is to make sure you pay off the full outstanding balance each month, with the money you stashed, before you are charged interest. When you claim your rewards you could either use them as Christmas gifts, or redeem them against your own Christmas shopping.

Plus, you will earn interest on the money you stash in your savings account and get a tick on your credit report each time you make your monthly credit card payment by the due date.

Alternative ways to spend

Debit cards and credit cards are not the only way to spend this Christmas; prepaid cards are an excellent alternative for consumers looking for a way to budget. Prepaid cards are similar to pay as you go mobile phone in the sense that unless funds have been loaded it cannot be used. This means that cardholders can load their pre-budgeted amount on to the card and hit the High Street without any concerns of over-spending, emptying their bank account or getting an unwanted credit card bill.

Consumers backing away from credit

It seems that Brits are doing everything they can to avoid having huge outstanding balances on credit cards in the New Year by using money they have available rather than seeking other forms of finance. It is predicted that credit cards will be used less again this Christmas as the continued difficult economic climate makes it difficult for consumers to access credit and make the repayments. This is a change in direction from three years ago when four in ten consumers used credit for splashing out at Christmas.

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