The best prepaid cards for home and travel
Prepaid cards come with many advantages but also many different types of fees. We look at the best deals for holidays and for staying at home.
Prepaid cards are like pay-as-you-go debit cards but they aren’t linked to a bank account. You load money onto them and can only spend what is on the card. People find them handy for both budgeting at home and when they're travelling.
But wading through the multitude of cards on offer can be an arduous task. Luckily we’ve done the hard work for you and sourced some of the best cards on offer for holidays and shopping at home.
Best cards for holidays abroad
Most prepaid cards will come in euros, dollars or sterling. If you’re travelling within Europe or the US then a card in euros or dollars means you can fix the exchange rate when you load money onto the card. This is a good idea when rates are strong or you think they might soon fall.
A sterling card, on the other hand, can be used anywhere but means you’re subject to fluctuating currency exchange rates every time you make a purchase.
FairFX Euro and US Dollar cards have no monthly fees, no charges for transactions abroad and it’s free to reload money onto the card by debit or bank transfer. You also get a competitive exchange rate and use them anywhere that accepts MasterCard.
However, you will be charged €1.50 on the Euro Card when you withdraw cash, $2 for the US Dollar Card and £1 for the Anywhere Card in sterling. The latter also charges 1.4% on transactions and is £9.95 to buy unless you load over £500.
Caxton FX cards are free, as are international transactions on all three types of card and you can use one wherever Visa is accepted. There are also no charges for the Europe and Dollar Traveller Cards when you withdraw money from an ATM abroad (but there are if you withdraw cash in the UK). There’s a 2.75% mark-up for transactions in a currency different to the currency of the card – this would hit people using the Global Traveller Card on holiday outside of the UK and most providers charge in this way.
Travelex offers free Cash Passport cards in six different currencies, helping you to avoid the cost of converting your money into the local currency every time you pay for something. There are no ATM or transaction fees if you buy the card from Travelex direct and it’s free to reload money onto the card, except with the sterling card where a 2% charge applies.
Meanwhile, euro and dollar cards from MyTravelCash have no transaction, ATM or load fees and offer 1% cashback on all transactions. The sterling card comes with transaction fees of 2.99%.
Find more information about prepaid cards for holidays, along with quick-view tables, in The best prepaid cards for spending abroad.
Best for everyday use
Like some credit cards, there are prepaid cards that pay you cashback when you shop. Besides the MyTravelCash cards mentioned above, MySpree pays 5% for purchases in-store and online at over 40 big name retailers, including Marks & Spencer’s, Boots, John Lewis and Argos.
There’s a £4.99 sign-up fee and it’s only available as a staff reward scheme so you might need to convince your employer to set it up. Find out more in MySpree: New way to earn 5% cashback on your shopping.
Cashback is added on top of any promotional deal and can also be used simultaneously with Pockit’s voucher codes, which offer discounts of up to 75% for purchases online. There are free money loading options and no charges for transactions. Cash withdrawals cost £1.
If you choose the pay-as-you-go option, there is a £5 one-off application fee and a 45p charge on transactions. ATM fees rise to £1.50. There’s no cashback on this option but you can still use the voucher codes and partner deals, the latter of which includes discounts on insurance, energy and travel.
Best for building credit
If you’ve had money problems that affected your credit rating in the past, or if you’ve never had credit before, you can use the Creditbuilder feature of the Cashplus prepaid Gold MasterCard. This can improve your chances of getting better offers on loans, mortgages and credit cards in the future.
It’s £4.95 per month for the Activeplus deal but comes with fee-free top-ups, fee-free UK transactions, purchase protection and cashback when you shop online. However, you'll pay £2 for any UK ATM withdrawals. The monthly fees act like loan repayments, which is how it works to improve your credit rating.
Best for young people
The new Visa Prepaid CitizenCard combines a prepaid card with an ID card and is available for anyone aged 12 and above. The card itself displays your date of birth and age band (e.g. 12-15 or 18+), while parents can monitor what their children spend money on if they’re under the age of 16.
The card costs an initial £15 and comes with a £1 fee for UK cash withdrawals. You also have to pay another £9 when moving up an age band. For the full breakdown read Visa Prepaid CitizenCard: ID card that doubles as a prepaid card.
Best for sending money abroad
Parents whose children are preparing to flee the nest on gap years or anyone who wants to send money regularly to family or friends abroad might find a prepaid card is an effective way of doing that.
The Lebara MasterCard prepaid card is designed for this very use. You can load money onto your card and send money free to a recipient abroad holding the ‘Family card’. It’s £14.95 to get the card and international transactions are subject to a 2% foreign exchange fee. ATM withdrawals come with a £2 charge for overseas or £1.50 in the UK.
If you’re looking to transfer £100 quickly to France, for example, it would cost the recipient around £4 to take out the cash at the other end. The same amount via Western Union would cost just shy of £10.
Beware all the charges
Besides top-up fees, ATM fees and transaction charges, you could also be penalised for NOT using your card, known as an inactivity fee. Don’t be surprised if you’re charged when you want to close down the account either.
The myriad of charges on prepaid cards is irritating and is enough to stifle anyone’s enthusiasm when searching for the right one. A card might be free for something but will sting you somewhere else.
To simplify your search, ask how likely you are to withdraw cash with the card, whether you want to pay monthly, what you’re using it for – i.e. if it's for use abroad or for shopping. These questions will help determine the main charges to look out for.
Don’t forget Section 75
You might still want to make some purchases on a credit card because of the protection afforded under this clause of the Consumer Credit Act. It means credit card issuers are jointly liable with retailers if something goes wrong and is valid on purchases between £100 and £30,000.
There’s also no safety net for prepaid card providers under the Financial Services Compensation Scheme if the provider was to go bust. If that happened you would risk losing any money still on the card.