/ Money

What’s your experience of using prepaid cards?

Have you ever opted to use a prepaid card to spend money overseas or for any other reason? The Which? Money Helpline would like to hear your experiences.

Prepaid cards have become increasingly popular in the last decade or so. They’re used for a variety of reasons, but mainly as a means to withdraw cash and spend money overseas.

However, one downside to prepaid cards is that inactivity fees are widely charged.

This is particularly relevant during the COVID-19 pandemic, with the Foreign and Commonwealth Office continuing to advise against all non-essential travel abroad, and the government announcing a 14-day quarantine period for travellers arriving in Britain.

Prepaid cards: your experiences

As an expert on the Which? Money Helpline, I often speak to Which? members who have queries about how prepaid cards work, and from those who have been caught out by unexpected fees and charges.

I’d be very interested to hear your experiences of using prepaid cards, especially if you’ve used one on holiday in the past or were planning to this year before the pandemic. I hope that the card providers will be flexible and understanding with those who are unable to use them.

Read all the latest COVID-19 news and advice on our dedicated hub

If you haven’t used your prepaid card for 12 months, you’ll often be charged £2 a month. And, if you want to get your money back off the card, you will get the exchange rate on the day, which may mean that you lose money when it is changed back into pounds.

Do you love your prepaid card, or have you been caught out by unexpected fees and charges? Let me know your experiences.

Helping our members

Did you know about Which? Money Helpline? It’s staffed by financial experts with more than 100 years’ experience in the financial services industry between them.

Members can ask us questions about a range of personal finance subjects, and there are no limits to the number of calls you and your family can make, or the length of time you can spend talking to us.

What the Which? Money Helpline can help you with
  • Banking
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  • Wills/probate/trusts

(We do not offer regulated financial advice).

Which? members can call the helpline on 029 2267 0001.

Comments
Michel says:
5 June 2020

I use prepaid cards (goHenry) for my older children and find it very convenient with a refreshing layered parental control approach that educates as well as empowers young people at the very beginning of their digital money journey whilst encouraging them to save too. The cards are occasionally refused by retailers but overall a great experience and service.

I had a mortgage as soon as I became of age. That was the only discipline I needed. Sadly, that’s unrealistic today.

John – I don’t understand why you did not buy the house outright rather than use a mortgage. 🙂

In a country where young people are using less cash, perhaps it would be a little embarrassing to be given pocket money in cash when mum and dad don’t use it. From what I can see of the Gohenry card, the child can easily keep a close eye on their funds. That’s something that’s easy with cash and mobile banking but not quite so immediate if you are using cards and online banking. A child might not be keen on mum and dad tracking and controlling their expenditure, but by proving that you are responsible, hopefully the controls will be relaxed or removed.

I have no experience to contribute but the opportunities are interesting. Prepaid cards could also help those who are uncomfortable with credit cards, much in the way that some choose PAYG mobiles for various reasons.

It was only a one-bed flat, Wavechange, and my deposit was a third of the £3,900 price. On a salary of £525 I had to budget very carefully and take every opportunity to work overtime. I doubt if things are any easier for young people today.

No servants’ quarters or room to exercise the corgis? Never mind, I’m very impressed. We’d better get back to prepaid cards. 🙂

Zig Malendewicz says:
5 June 2020

I have a Euro pre-paid card.
I have not used it to withdraw cash but I have used it to pay for purchases, in shops, restaurants and hotels.
With two exceptions, I have not experienced any problems with my card and I am very satisfied with it. Normally I keep it topped up so that I can go over to the Continent at very short notice, as I sometimes do.
The first exception was when my card had expired whilst I was in Belgium and so it was declined, even though there was plenty of money in the account. Fortunately I had other Credit Cards. I was not aware that renewal was not automatic but that I had to apply for the card to be renewed. In this regard I think that the Card provider should have warned me about the pending expiry date, but I will know next time.
The other problem was that I could not pay for petrol at automat petrol stations. My card was declined.
Again, I had to use a Credit Card. So having alternative method of payment is essential.
So having alternative methods of payment is essential.

Em says:
6 June 2020

I was happy with my FairFX Euro card and good exchange rates on offer, until I logged into my account in May 2019 to top up my card.

I had remembered to renew my expired card in July 2018, which otherwise triggers a ridiculous monthly €2.50 “Card Management Fee”. Yet I found that this amount was being deducted for nearly a year.

There was also a €9.00 Damaged Card Replacement Fee applied a year before, that FairFX had agreed to waive when I telephoned to speak to them about getting a replacement card. Otherwise I would have simply left my card in the drawer until it was time to renew – less commission for them!

Both of these mistakes were put down to “administration errors” and €34 was credited back to my account. That just shows how expensive these cards can be, if you forget about their hidden fees.

If you have a FairFx or similar pre-payment card, I suggest you dig it out now and check the card expiry date. If it is imminent and you don’t think you will be able to use the balance, go to a local ATM and clear the balance by making a withdrawal in Sterling. Even with the €1.50 ATM and 1.5% back-conversion commission charges, it might be better than leaving the leaky tap open on your account until all the money disappears down the plughole.

Dallingtonia says:
8 June 2020

We had a Fairfx Card which had around E100 on it to use for small purchases when travelling in Europe. As I received so many fairfx promotional emails [weekly] I unsubscribed, and so didn’t get the one Fairfx alleges I was sent saying my card had expired and a monthly charge would be made. When I came to look at my account to top it up there wasn’t much left! I had an argument with FairFx about whether they had told me, and they couldn’t prove it, so in the end they gave me back my money and a new card, but it was such a fiddle, and I don’t think I will do this again. Now we can’t even travel to spend the money! It’s easier just to use my Nationwide debit and credit cards as almost everyone everywhere is now using plastic for everything.

Mike says:
6 June 2020

I have a Euro card and have used it in Hotels, Restaurants and Shops, I have also used it to withdraw cash from Banks and have had no trouble at all. The problem area seems to be fuel stations, I have had the card declined on several occasions when refuelling. I always carry credit cards with me, particularly the Halifax Clarity card as they do not charge a conversion fee.

I have had a Caxton prepaid card for several years. I can load the card from my UK bank account using my mobile phone and know that the sum loaded is immediately available in Euros. I use it mainly for withdrawing cash from hole-in-the-wall machines. I occasionally use it for making purchases. With one exception I have found it totally reliable and trouble free.

The exception was an occasion when I used it to buy motor fuel. I had not realised that this would involve having a relatively large sum in my account reserved by the fuel company with the actual payment transfer not being made until several days later. After buying the fuel I attempted to withdraw cash from a machine but was told that this was not possible since there was an insufficient balance in my account. The excess was returned to my Caxton account about a week later.

I found my FairFX Euro card very useful throughout Europe when I started using one 10 years ago. They are widely accepted by cash machines and businesses, but I have not used it in 5 years. I now use my regular credit and debit cards. I have found Countries where it is common for a business to accept only one type of card, Visa or Mastercard. I would carry both if possible. Some organisations’ readers, like French and Dutch railways, never seemed to like UK cards; this problem seems to have been solved, at least my Santander and Starling cards work with their machines now. Exchange rates are very good for cards, the only problem is knowing when you are going to be charged a fee and how much, but this applies to pre-paid as much as it does to credit cards. Being able to monitor the cards on a phone app gives me more confidence when using cards. I can check usage and charges, and if necessary I can suspend the card in a click. I travelled through 10 countries last year and found my cards universally accepted. For the first time, I felt I didn’t need the cash backup I usually carry.

David says:
8 June 2020

I also have a FairFX Euro prepaid card which I have used frequently when on holiday in Spain and Italy and have never really had an issue with. I got the card because the fees being charged by my bank when paying overseas with a debit (or credit) card were really making me feel ‘ripped off’. However, a year or two back my bank introduced a debit card which will debit a currency account when using that currency. I have a Euro account with my bank and when I spend in Euros it automatically debits that account, if I spend in Sterling it debits the Sterling account. This suits me fine and I now generally use my debit card. Another point – the prepaid cards are what they say, they are not credit cards – hence you cannot use them when you rent a car and a deposit is required, for example.

DAVID STONE says:
8 June 2020

I would never use one again. I tried to purchase fuel in Illinois but the card was declined as I could not provide a zip code that matched the card address. Visited another nearly fuel station with the same result. Unfortunately, at each pump $50 was “marked” against the balance and was kept on for about three weeks, reducing my available balance by $100. When I contacted the card issuer I was advised there was nothing that could be done, even though I had not spent any money. Not only was it embarrassing as i had offered to pay for the fuel for our trip but it left me short of funds. The only good thing was on my return to the UK the card issuer refunded the balance at the rate I had purchased the dollars.

I have had a Moneycorp Explorer card for over 10 years now, and gone through several changes in administrators of the card. In general I have found it to be useful and usable in accordance with the definitions given, so not usable/suitable to make any kind of deposit or holding charge. It has become less valuable over the last 2 years or so as the exchange rate being applied on reloading the card has deteriorated to being worse than used in ordering cash for collection or delivery. Also cross converting currencies in different “wallets” is even worse. I agree with some of the other contributors that maybe now the more normal credit/debit card providers that have reduced or cancelled their charges may now be a better option and have started to use a Santander Zero card, although it is not completely free of any charge.

John Hunt says:
8 June 2020

For many years I’ve been using a preloaded Caxton FX Euro card as a convenient method for holiday spending. Their exchange rate is always one of the best. There is no charge for using the card, either for withdrawing cash or for paying in shops, restaurants etc. It enables me to load it when the GBP is strong so I don’t have to worry about fluctuating rates whilst away or pay bank charges.

Graham Tregonning says:
8 June 2020

I used a Sainsbury’s Card in the States last year, I had no problems using it as a credit card, but I was saving it for cash withdrawals mainly. The main issues I had in the States with taking out cash was that the charges per machine vary a lot and some have a complicated menu structure so at one point, I actually took dollars off my card in Sterling and the Machine then converted it back to dollars, so as you can imagine I ended up paying fees twice over. It was because the machine recognised it as a UK card and it was a trick, the other machines I used, had not tried to play on me, but you only get caught once. The only other tricky bit, was trying to run the card down to zero, before we came back, as it was a once in a lifetime trip.

Peter says:
8 June 2020

I’ve used a Travelex card for Euros a few times. The top up via app works great. The only thing to be careful with are ATM charges in some specific cases. I tried the easyJet card when Travelex was hacked. It seemed like I was dealing with someone working from their bedroom. I’m stuck with money on the card and don’t see any option other than withdrawing it from an ATM in GBP.

Peter Freeman says:
8 June 2020

I spend a lot of my time in the Seychelles. I have Revolut, FairFx and Starling cards. The Revolut card has very poor Seychelles Rupee to GBP rates, Fairfx is better but charges fees, so I just keep those for an emergency. The Starling card – strictly a debit card I suppose – has excellent exchange rates, no fees and a very fast efficient mobile phone app.

Geoff Longmire says:
9 June 2020

I have a Post Office pre-paid card which I was sold at the counter several years ago, when collecting some Euros. It sounded like a good idea so I put (I think) £50 onto it, as an emergency fund, thinking that if I found myself stuck anywhere in the World, I would at least be able to get a taxi. I have never used it. To be honest, I read so many confusing reviews that I wrote off the £50, though it’s probably still there. I naively imagined that the card would allow me to spend any currency and it would be automatically converted to Sterling. I don’t think that happens but can’t be bothered to waste any more time finding out. Sorry, I guess you don’t want to hear from lazy people like me: usually I take a very “hands-on” approach to money matters but this product just left me confused and after trying to work it out for an hour or so I decided that time is best spent on more productive matters.

I have a Utility Warehouse prepaid Visa card. When this was ‘sold’ to me I understood that I could get ‘up to 10%’ cashback from participating retailers and 1% on all other transactions. Sounds good …..
The only stores I use are Boots, M & S (both 2%) and Argos and Halford (both once). I’ve never heard of most of the others (Harrod Horticulture or Trampoline Warehouse anyone?) and certainly wouldn’t use them on a weekly/monthly basis. To achieve the advertised £441 cashback p.a. it assumes a monthly outgoing of £650 and a 3 -7% cashback. (Terms and conditions small print). This didn’t bother me unduly as I was happy with 1% on all other transactions. But (and this is a big but) the 1% only applies to the first £1000 per month. I was paying for fuel, insurances, food, holidays in fact everything I could until I realised the the most cashback I could get per month was 1% of £1000 i.e. £10. To make matters worse there is a monthly fee of £2 which reduces your monthly cashback to £8 (or £96 per year).
That’s not to say that I wouldn’t recommend U.W. My landline, mobile and broadband costs are much less than I was paying and I intend to renew these at the end of this month.

Em says:
9 June 2020

I don’t think anyone has mentioned the elephant in the room yet.

Namely, unlike your current account debit card, these are not covered by the Financial Services Compensation Scheme. In theory – and in practice for some retail cards – you could lose the lot if the provider goes under. And unlike a credit card, there is no Section 75 protection, although you are unlikely to need that protection for normal holiday transactions.

I’ve thought before about using a prepaid card for the benefits such as cashback but then I’m mindful that I lose sight of my overall spending. I like apps such as Starling for banking as you can easily see where your spending such as shopping/leisure but if you keep having to top-up a card you don’t have the same insight.

Em says:
10 June 2020

If you are travelling to Spain, it is worth looking at a Santander Debit Card Account. As long as you use a Santander branch or ATM machine, there are no conversion charges or fees. Sterling to Euro conversion rate is based on the Mastercard or Visa rate in force at the time of the withdrawal.

See current terms and conditions here (expand Fees and charges abroad – Debit card):

https://www.santander.co.uk/personal/support/credit-cards/travelling

John Garner says:
10 June 2020

I have been using a Caxton .pre-paid card for overseas travel for many years. It’s a sterling card which converts to the local currency when it’s used but I’m billed in sterling It’s always best to opt to pay in the local currency as the Caxton rate converted back to sterling is usually good. Never had any problems with it being accepted in Europe, the USA or Caribbean for payments and at ATMs. The only fee to be paid is when you withdraw sterling you’ve previously put on the card (eg when you return from overseas and don’t want to leave a balance on the card). I also use a Halifax Clarity credit card as this has no fees either and the conversion rate is usually slightly better then Caxton.

I would be interested in hearing how other people get on with the Revolut card which I am thinking of getting for my mum who is shielding and needs neighbours to help with the shopping.