I’m taking a trip to Germany later this year, and that has me thinking: What’s the best way to spend money over there? Using my debit or credit card entails foreign transaction fees. And I don’t exactly fancy carrying around enough cash to finance the whole trip.
Last time I was in Germany (when I was younger and much, much less wise), I used my debit card to withdraw cash at ATMs whenever I ran out. When I got back home, an account statement full of nasty ATM fees awaited me. A logical solution for this trip, I figured, would be a prepaid card. Unlike cash, you have some recourse if it gets stolen — just report the theft to the card provider to shut down the card and thwart the thief (who would need a PIN to get the funds anyway). Plus, a prepaid card wouldn’t be tied to my bank account, helping me lessen my risk of identity fraud. Finally, the budgeting angle appealed to me. I’d have only the money on the card and no more — with, of course, the option to reload if absolutely necessary, for emergencies (or good German beer).
The prepaid options for Americans traveling abroad, however, aren’t exactly without costs and inconveniences. In fact, I’ve concluded they’re more trouble than they’re worth. Here are some of the options I looked into. If you make it all the way to the end of this blog, I’ll share the plan of action I decided on.
Prepaid cards for travelers
1. MasterCard Cash Passport
The good: At first blush, this card was a shoo-in, and it’s the first result if you run a search for “prepaid card for travelers.” You can load the card in foreign currency (including the euro), meaning you lock in the exchange rate on the day you load the card. Because you’re doing all your spending in euros, you avoid foreign transaction fees. Cash Passport also provides 24-hour global assistance, in case your card is lost or stolen.
Even better, there’s a chip-and-PIN version of the card, meaning it uses the security technology that’s becoming more common in European card readers. While you can usually still use a U.S. card with a magnetic stripe in Europe, you may have to explain it to the cashier. In my experience, cashiers have shaken their heads and handed my funny-looking card back to me, especially in off-the-beaten path locations.
There are no fees to load the card and no card purchase fees, either — only an ATM fee of €1.75. The issuers make money by offering a less favorable exchange rate — just as currency exchange places at the airports do. If I were to load $500 onto the card, I’d get €351 euros. I’d get €389 if I picked up cash from my bank before leaving.
In other words, I’d be paying $38 for the privilege of the Cash Passport. Ultimately, I decided I’d be willing to pay the price, for the added security and for the convenience of not having to worry about foreign transaction fees.
The bad: I can’t seem to get my hands on this card. Although you can order online via the U.K. site, the U.S. site instructs you to go to a participating bank or Travelex location. Problem is, the bank that issued the card (Suburban Bank) just discontinued it. And, although there’s a Travelex location near me, Travelex has temporarily discontinued the card as well. The rep I spoke with said they were hoping to offer it again by June — and I’m traveling in May, so that’s cutting it close.
2. Visa Travel Money
The good: This card comes with some travel insurance protections, including lost luggage cover for up to $1,000 if your baggage gets stolen. It also provides 24-hour emergency services or everything from replacing the card, to making emergency travel arrangements, to finding a local doctor. You can reload the card via phone or online from anywhere. As an added perk, you get 90-day purchase protection, which covers you if the goods you bought get damaged or stolen.
You can get a card by ordering online or using the website to find a location that sells them. If you’re doing the latter, though, be sure to call ahead. While the website indicated that my local supermarket chain offers them, none of the five locations I called had them in stock. Three of those locations had never heard of the card.
The bad: This card is fee-heavy. Fees vary slightly, depending on where you purchase the card, but, at worst, expect to pay about $5 to get the card, a $3 for foreign ATM withdrawals, a $6 monthly maintenance fee, a 3 percent foreign transaction fee (because the card can be loaded only with U.S. currency) and re-loading fees (which vary, based on the amount loaded).
3. Other banks’ travel cards
I called up my banks to ask if they had prepaid cards that could be used abroad. One of them did. Reloading the card from abroad wouldn’t exactly be convenient however, as the only options are direct deposit or a visit to a branch (the bank doesn’t exist overseas). That means I’d have set up a direct deposit and schedule it for while I’m away — or predict exactly how much I need in advance and hope I don’t run out of funds.
The fees are pretty hefty, too and nearly identical to those on the Visa Travel Money card. I’d have pay to get the card, pay per month, pay for ATM withdrawals, pay for customer service calls and pay for each transaction.
My game plan
Disappointed about the prepaid card offers, I called a family member who lived in Germany last year, and asked for advice. She pointed out that, while most German merchants are getting increasingly better about accepting plastic, many shops, small restaurants and tourist attractions still take only cash. So why would I be willing to pay so much to get a prepaid card that may not even be useable?
I also had a chat with the bank that issued my debit card. If I use the ATMs at the German bank it partners with, I’ll be charged no fees. That bank has ATMs all over the cities I’m visiting. If I can’t find one, I’ll have to eat a $5 fee plus 1 percent of the withdrawn amount (and any fees assessed by the bank that owns the ATM).
Because my travel buddy and I have prepaid for our accommodations (our biggest expense), the only money we’ll need to carry is for meals and entertainment.
So our solution is a simple one: We will get enough cash in advance to cover the first half of our trip (which is 9 days long). Then, we will find an ATM (hopefully a free one) and make one withdrawal halfway through the trip. I’ll also store a credit card in the locker we’ll be renting at our hostel, in case of an emergency.
I’m hoping some of you globetrotters can chime in with advice. Have you had any luck with prepaid cards for travelers? Any other tips for spending abroad?
And now, whether you’re trying to save money while traveling or staying home, here’s some inspiration from our favorite personal finance blogs of the week:
Three Thrifty Guys list off nine common ways people waste their tax refunds.
Grayson from Debt Roundup shares the best money lesson his parents ever taught him.
Frugal Rules has some tips for handling your money while traveling abroad.
Cash Cow Couple breaks down the cost of their inexpensive but fun honeymoon.
Money Soldiers offers some advice about what to do if your partner is in debt.
Money Crush suggests 11 ways to save on transportation costs.