How to save money when paying abroad

By Staff Writer Ruth Jackson Jul 17, 2009

Ruth Jackson

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Need to organise your holiday cash? A foreign currency pre-pay card could save you more than you think. A pre-pay card works much like a standard cash card, except that it needs loading up before you use it and it isn't linked to a bank account. Like a traveller's cheque, if you lose the card you can get it replaced without the fear of losing any money. These cards also offer the convenience of a debit card as you can use them to withdraw money from cash machines or pay for goods in shops.

The main saving when using a pre-pay card abroad, rather than a credit or debit card, is there's no foreign-exchange usage fee. Most credit cards, for example, charge you between 2.5%-3% on overseas transactions. In the past you could dodge these charges on a debit card by using a Nationwide Flexaccount card, but the introduction of a 0.84% charge leaves pre-paid cards as your only fee-free option.

Another big perk with certain pre-paid cards is that some of them – such as the Travelex Cash Passport – are Visa Electron cards. This breed of debit card is fairly rare, but has one major advantage over other types of debit cards – Ryanair, Easyjet and other budget airlines don't levy a booking or processing fee if you use one. So you can sidestep those cheeky airline 'payment handling fees'. That feature alone could save you as much as £5 per person per flight with Ryanair – that's £40 for a family of four.

To get a Travelex Cash Passport, visit www.travelex.co.uk. The cards are intended for foreign, not British, spending. However, you can load up a card with sterling intended for overseas use by picking certain destinations. Choose Barbados, for example, from the drop-down currency menu and you will be able to load up your card with sterling. The minimum amount you can put onto the card is £100 – free if you do it online, or subject to a fee at a Travelex counter. Then once you've loaded up your card use it to book your holiday flights and save yourself a bit of cash.

One downside to the Travelex Cash Passport is that you will be charged £2.50 each time you withdraw money from a cash machine. But you can use the card for purchases free from any fees.

Also be aware that if you don't use the card for 12 months you will trigger a £2 monthly inactivity fee. So either use it from time to time or cancel it after you've purchased your flights if you think you won't need it again.

Overall, for a little bit of extra effort, a Travelex Cash Passport is well worth nabbing for the flight and holiday-money savings alone. As a bonus Travelex also offers very competitive exchange rates. Enjoy your trip.

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Published in Personal finance | More articles by Ruth Jackson

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