The best way to carry holiday cash

by Ed Bowsher on 11 August 2009  |  13 comments
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Pre-paid travel cards are great!

I first travelled on my own when I was 18. I set off to Canada with loads of youthful enthusiasm and some American Express travellers' cheques.

That was 23 years ago. Things have moved on since then, and the modern equivalent of travellers' cheques is a pre-paid card or travel money card. When I returned to Canada last month, I took a pre-paid card with me.

Here's how they work:

Basically, you buy a card, load it up with foreign currency, and then you can use it like a normal credit card at shops and restaurants abroad. You can also use the card to withdraw cash from an ATM. Unlike a credit card, once you've spent all the cash on the travel money card, you can't use it again until you've loaded on some fresh money.

I'm aware of three such cards that are available in the UK market: The FairFX prepaid card, one from CaxtonFX and the Travelex Cash Passport.

For my trip to Canada, I used the Travelex card. That's because FairFX and Caxton don't allow you to load Canadian dollars onto their cards.

It worked really well. The best thing was that I had effectively bought all my dollars at the beginning of the trip, so I didn't have to worry about exchange rates moving against me while I was away. I also liked the fact that Travelex would send me a new card if my original was stolen. What's more, all the Canadian merchants happily accepted my card.

On the downside, I didn't use my card for cash withdrawals because I would have had to pay a fee. My only other minor quibble was that it took a while to obtain my card when I was at Heathrow. I had pre-ordered the card online so that I would get a better exchange rate, but it still took a while to pick up the actual card from the Travelex bureau de change at the airport. So make sure you get to the airport reasonably early....

The good news is that since my trip, Travelex has abolished charges for cash withdrawals from ATMs. It's also introduced a guarantee that its exchange rate is as good as its competitors. If you find that you can get a better deal elsewhere on the day, Travelex says it will refund the difference.

Next time I go abroad, I'll definitely take a pre-paid cash card with me. I'll do some research at the time to check whether Travelex still offers the best product for my needs.