Whether you travel frequently for business or are considering a family holiday overseas, you have to make a decision about how you’ll handle your money while travelling. Your cash probably won’t be accepted internationally, so you’ll have to exchange it for local currency. You also have to worry more about losing cash because you can’t replace it if it’s lost or stolen. Traveller’s cheques are a common substitute for cash, but they can be inconvenient (even though safer and easier to replace) and you might end up with cash as change anyway. Credit cards are another option — replaceable if lost or stolen, and you don’t have to worry about things like counting out the correct change in a currency you aren’t familiar with.

Rather than using your regular credit card though, you have yet another option — prepaid credit cards. Are they a good option for travellers? Let’s look at some of the pros and cons of using prepaid credit cards when you travel overseas.

Pros of Prepaid Credit Cards for Travellers

Prepaid credit cards definitely have their benefits for travellers. For example:

•    They offer more protection than cash.
•    They offer the convenience of a typical credit card.
•    You can set a spending limit for your trip by adding only your budgeted amount to the prepaid credit card.
•    You can give a prepaid credit card to each family member on the trip with their own specific budget.
•    You might be able to lock in your exchange rate rather than having fluctuating exchange rates every time you use your regular credit card. To do this you would need to get a prepaid credit card in the currency of the country you’re visiting. For example, ANZ offers a prepaid travel card which you can get in six different currencies.
•    You can leave your traditional credit card locked away in the hotel safe for emergencies and not risk having it lost or stolen.

Cons of Prepaid Credit Cards for Travellers

Prepaid credit cards also have some downsides that you should consider before deciding to use them on your trip, such as:

•    Your “cash on hand” will be less than if you simply carried your regular credit card with you, meaning if there’s an emergency and you need funds you’ll have to find your way back to your hotel first.
•    Not all prepaid credit cards can be refilled, so you might feel overly limited if you can’t add to your previous balance (such as if you wanted to give your kids a daily limit rather than one bigger balance for the full trip).
•    Prepaid credit cards might come with high fees for various things — set-up, inactivity, or cash withdrawals for example.
•    If you don’t use the full balance while travelling, and you had the credit card set up in your destination’s currency, you would pay extra in currency conversion fees to use the rest of your balance back in Australia after your trip.

Overall prepaid debit cards‘ benefits seem to outweigh their potential problems. Just understand up front that it will cost you more if you load the card with more funds than you really need. If you want to keep your cash and your existing credit cards as safe as possible, prepaid credit cards are a viable alternative to traveller’s cheques.