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Using Prepaid Credit Cards to Travel
Avoiding fees, theft and poor budgeting habits

If you don't want to carry a regular credit card, prepaid credit cards are a fantastic substitute with most of the advantages and few of the disadvantages of everyday cards.

When mass travel came into vogue in the 1960s and 70s, we had few choices about carrying money: we could use travelers checks (or travellers cheques, if you're British), receive wire transfers as we traveled, carry credit cards (yes, they did exist) to purchase things or withdraw money at a bank (after standing in line for hours), or take along huge wads of cash stuffed in our travel money belt.

Things have never been so easy.

How do prepaid credit cards work?

There's nothing simpler. You pay up front. When the card runs out, you refill it. Use it like a credit card, but get no bill at the end of the month, only a statement showing what you've spent. That's why it's prepaid.

There are clear advantages

  • All you do is decide how much to put on your prepaid credit card - and deposit that amount on the card, as you would into a bank account.
  • Once the money is spent, you refill the card, something you can often do online, a bit like topping up a phone card. Or stop spending.
  • You won't have to pay interest or go into debt, and you'll be able to use it just like a regular card.
  • These cards ensure you'll be able to make reservations, buy things, and withdraw cash at any ATM machine around the world.
  • You don't have to worry about a budget - you can't spend more than you have on the card.
  • You can get them even if you don't qualify for a regular credit card - for example if your loans are over-extended or if you don't qualify for some other reason.
  • In an emergency, you'll be able to buy a ticket home or get some ready cash.
  • Cards are convenient and safe - if they get stolen and you report them, you won't lose much money.
  • If money conversion is an issue, this will be eliminated because all purchases are charged back to you in your home currency.

And a few disadvantages

  • Refill charges can be high.
  • You'll also have to pay a one-time up-front fee to set up the card and open an account.
  • ATM transactions are not usually free.
ATM machinesPrepaid credit cards are useful for purchases and ATM machines worldwide

Of course you can also use a regular credit card, your own or a new one you get just for travel.

What you can no longer afford to do is travel without a card of some sort, credit, debit or prepaid. 

Credit cards - prepaid or regular - are accepted in most major cities, although they're not used as widely in developing countries. Hotels and major restaurants accept them, as do airlines and expensive shops. Smaller shops, however, often take only cash. And, in many countries there is a commission added to the credit card purchase so you'll have to pay a few percentage points above the actual listed price.

The most widely accepted cards are Visa and Mastercard, both of which have prepaid and gift versions.

Many also come with insurance, so if what you buy is stolen, lost or broken, you'll get a refund. Some credit cards also cover life insurance, health insurance or accidents.

A few more travel cash possibilities

In addition to gift cards and prepaid credit cards, there is always the virtual credit card, or VCC. This costs significantly more in fees but can also be an option depending on which country you're from. For example, in Switzerland you can get a Swiss Bankers card at tobacco shops and post offices. In the UK there's Entropay and others as well.

And then there's PayPal, if all your transactions are done online, although this is not recommended as your primary cash stash overseas.

Finally, if someone should want to give you a present before you leave (these are always welcome!) ask for one of the prepaid gift cards. Having a widely accepted form of currency is a convenience every traveler should have.