Foreign Exchange Vs. Prepaid Credit Card

The holiday season can either turn into the best time of the year or an outright disaster, depending on the right decisions and a bit of planning. If you are going abroad then one of the things you will need to do is make sure you have your travel money exchanged into the local currency. Back in the days, going to the foreign exchange bureau to pay a costly commission fee and getting a poor exchange rate was the only option at your disposal. Today, however, you might want to think about using a prepaid credit card instead. Let's have a look at their respective merits in turn.

Foreign exchange: A tainted image

Although its image has been considerably tainted over the past decades, there are still a few benefits to using foreign exchange. Most importantly, you will have cash at your disposal in the country of your destination. This means you can perform small purchases like coffee or bus fares without having to draw money out of an ATM, which can be costly. Especially when you're arriving at a remote destination without any cash at all, this can come in handy.

And yet, having money in your wallet instead of a prepaid card can also have its disadvantages. If you get your wallet stolen, or lose it, you may be in deep trouble. You will also need to take into consideration that foreign exchange rates can often vary considerably. Different places will exchange your money for quite different rates, you can rarely be sure that you have got the best rate possible. Should you want to take this risk nonetheless, at least make sure to never use the foreign exchange desk at the airport. It is the worst possible place to exchange your money, as you will be paying far more than if you go to a travel agent’s on the high street.

Prepaid cards: Protect your money

A more recent alternative to using a foreign exchange bureau is to put all your travel money onto a prepaid card. This has many advantages over taking cash. The most important one is that you have all your money protected. Should something happen to your card, for example, you will be sent a replacement to your holiday destination with all the money that was on it remaining. This offers the holiday traveller great peace of mind.
Other advantages are for those people who cannot get a debit or credit card so are forced to use foreign exchange bureaus to change their money. For them, a prepaid card is an excellent way of taking travel money abroad. Prepaid travel money cards tend to be accepted at most places on your holiday, just as a usual debit or credit card is. The prepaid card comes with a chip and PIN, as with the usual bank cards, thus protecting you from fraud. Should you run out of money then you can top up by using the Internet or your mobile phone – in some cases, this can even be done by friends or relatives and offers a great protection from unexpected emergencies.

Another plus point for using a prepaid card over foreign exchange is that you are usually guaranteed the very best possible rate so you don’t have to waste time shopping around to make sure you get the best deal. By combining the two options at your disposal – i.e. exchanging just a basic amount of money for your basic cash supply and using your prepaid card for the remaining purchases on location – you can benefit from their respective benefits and arrive at a both safe and convenient solution. As a result, your vacation will truly offer you the relaxation you so desperately need.

This article was written in association with Tuxedo, a leader in the field of prepaid solutions.
Gavin Wittaker has written about finance-related topics for the past ten years. His main ambition has consisted in explaining the impact of complex financial developments in layman's terms and describing how they may affect the public at large. To Gavin, there could hardly be more exciting topics than analysing payment options in the 21st century, digital commerce and prepaid cards – and yet, you may find him listening to the Black Keys or reading the latest novel by Stieg Larsson.
The image is licensed from PhotoDune.net.

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