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Ask an Expert: are prepaid cards the best option for spending overseas?

Each week, the Which? Money experts answer your financial queries. You can submit your questions to money-letters@which.co.uk[1], or via our Facebook[2] or Twitter[3] pages.

Q: I’ll be going on holiday soon and would like to know the best ways to spend while I’m abroad. I’ve used prepaid currency cards in the past, but have found that they’re not always practical as I wasn’t able to use them everywhere. For example, several petrol stations refused to accept them.

Submitted via Which? Money Magazine[4]. A: Many of us look forward to visiting loved ones or escaping the cold this Christmas – but working out how to manage day-to-day expenses abroad can be challenging.

Unexpected circumstances often pop up when travelling, so make sure you have a range of payment options – including a small amount of cash, as well as a credit or prepaid card. Which? explains the best way to manage your money when planning a trip, including prepaid, credit cards and debit cards, as well as buying currency.

Prepaid cards for spending abroad

Prepaid cards are a popular option for travellers.

You can choose how much to load onto your card in advance, which may help you reign in your spending, and the fees are often lower than using a debit or credit card. If you’re planning to spend euros or dollars, some prepaid cards[5] allow you to load up on that currency before you leave. This ‘locks in’ the exchange rate, so you know how much you’re likely to spend and don’t get any unpleasant surprises.

Most of these cards charge a fixed ATM fee, though some will charge you a percentage of your withdrawal. Alternatively, you can take out a ‘sterling prepaid card’,[6] which allow you to pre-load pounds. This means the exchange rate will be decided at the moment when you make a withdrawal – which could be good or bad news, depending on how the pound performs.

The market-leaders for sterling prepaid cards[7] are Monzo and Revolut. Revolut offers free withdrawals of up to GBP200 per month, then charges 2% on each transaction. Monzo currently offers free withdrawals, but plans to start charging in the new year.

Best credit cards for overseas

When using a credit card overseas, it’s important to watch for hidden charges.

Some of the most common include:

  • A foreign loading fee of up to 2.99% every time the card is used
  • Interest charges incurred from the moment the card is used, even if the balance is fully paid off
  • A cash withdrawal of around 3% when you use an ATM abroad.

You may also lose track of how much you owe, as the exchange rate tends to change from day-to-day. But some credit cards don’t charge for foreign usage – which could be an advantage for frequent travellers. Which? rates the best credit cards for foreign usage[8] here.

Using a debit card

Of all your ‘plastic’ options, a debit card[9] is likely to be the most expensive.

Like credit cards, there are a number of unexpected charges which could add up during a week away, including:

  • A foreign exchange fee of up around 2.75%-2.99%
  • A cash withdrawal charge of around 2%
  • A ‘penalty fee’, which some debit card providers levy on every transaction

If you have to use your debit card, consider making a single large withdrawal at the start of your holiday, rather than using it over-the-counter. But the percentage fees on a larger transaction may be hefty, so work out the likely fees beforehand. It’s also wise to tell your debit card provider that you’re planning to be overseas, to avoid having your card blocked for ‘unusual activity.’

If you do want to use a debit card, Starling Bank charges no fees for overseas transactions worldwide, while Metro Bank charges no fees in Europe – and a number of other providers offer reasonable deals.

Buying foreign currency

Regardless of how many cards you have with you, always carry a bit of cash. Card payments are not accepted on transport or in retailers and restaurants in many countries – including some that may surprise you. It’s also handy to have a cash reserve in case your card is stolen, goes missing or gets blocked by your bank.

When buying travel money,[10] it’s important to shop around for the best deal. Tourist hotspots – especially airports – are often likely to offer the worst exchange rates. Often currency dealers will allow you to haggle, so don’t be afraid to push back on a low offer.

A number of services allow you to buy currency online[11] before you travel. Often they offer good rates and the convenience of picking up your cash at the airport. But these services aren’t regulated by the FCA – so if they go bust, you may not get your money back and there are less safeguards against fraud.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029).

Which? Mortgage Advisers and Which? Money Compare are trading names of Which?

Financial Services Limited.

References

  1. ^ money-letters@which.co.uk (www.which.co.uk)
  2. ^ Facebook (www.facebook.com)
  3. ^ Twitter (twitter.com)
  4. ^ Which?

    Money Magazine (try.which.co.uk)

  5. ^ prepaid cards (www.which.co.uk)
  6. ^ ‘sterling prepaid card’, (www.which.co.uk)
  7. ^ sterling prepaid cards (www.which.co.uk)
  8. ^ best credit cards for foreign usage (moneycompare.which.co.uk)
  9. ^ debit card (www.which.co.uk)
  10. ^ buying travel money, (www.which.co.uk)
  11. ^ buy currency online (www.which.co.uk)

Y-Cam now charging for previously free cloud storage

The UK-based home security company Y-Cam Solutions has changed its free unlimited cloud storage service. Previously, if you purchased a Y-Cam smart security camera, you received unlimited storage in the cloud for a rolling seven-day period. Under the new terms, existing users will have the seven-day cloud storage limited to one year with effect from the date of activation.

To continue using the storage after that they will have to pay a monthly subscription fee of GBP2.99 per camera. Y-Cam customers can’t use alternative options for storing their recorded footage, such as third-party cloud storage (DropBox, Google Drive, or OneDrive) or their own networked hard drive. Existing camera owners were sent an email on behalf of Y-Cam giving them 14 days’ notice of the changes coming into force.

Essentially, important features are being rescinded unless people are willing to pay. New customers will also get free cloud storage for a year before they have to pay. Best Buy wireless security cameras[1] – find out which models topped our tests.

As you can expect, Y-cam customers are not happy with this development, and have voiced their criticisms via Twitter:

@ycamsolutions[2] very disappointed that you’re charging for all camera storage. I feel like I’ve been suckered in with little option and very little time to decide. You always promoted yourselves on the free 7 days storage and now you’ve taken that away.

— Stewart Bamford (@camcanary) November 30, 2017[3]

.@ycamsolutions I bought two y-cam Evo cameras based on your promise of *free forever* 7 day cloud storage.You CAN NOT yourself change the original terms of sale for existing customers, either refund or grandfather existing customers! pic.twitter.com/qzcEs6yf6H[4][5] — Jean-Pierre Deckers (@JPDeckers) December 1, 2017[6]

@ycamsolutions said…”when purchasing a home security camera that cloud storage is an essential, otherwise you are just buying a live streaming machine, so basically a web cam! Because of this, at Y-cam, we believe Cloud storage should be provided to customers free of charge” pic.twitter.com/uabPwDDMPk[7][8]

— Graham J Phillips (@phillipsjgraham) November 30, 2017[9]

The tweet above shows older marketing material used by Y-Cam highlighting the differences in ongoing costs between its camera and those of its competitors. Some customers say they have complained to the Advertising Standards Authority and Trading Standards about Y-Cam’s marketing material promoting lifetime storage at the time they bought their security camera. Y-Cam has responded to complaints from customers by releasing additional information:

We have received lots of feedback following our recent announcement and we feel it necessary to address some of the reaction we have seen https://t.co/d95g7Jn5BI[10]

— Y-cam (@ycamsolutions) December 4, 2017[11]

Since Y-cam announced its decision to limit Y-cam’s free cloud recording service to 1 year we have been very aware of the disappointment and frustration that this decision has caused. So without any reservation we want to say sorry. https://t.co/7f8VGNkyOF[12] — Y-cam (@ycamsolutions) December 7, 2017[13]

Devin Chawda, co-founder and CEO of Y-Cam told us: ‘Y-Cam has been a trusted British security brand since 2007 and apologises to all customers that feel let down by its decision.

Whilst regrettable, the move was necessary due to the increasing cost of providing the infrastructure and remaining compliant with the ever-increasing burden of data security. ‘Unlike cheaper IP and CCTV cameras, the Y-Cam system operates through a central cloud-based technology platform that requires hundreds of servers processing over three million videos for its customers every day. It is a fully managed system with highly qualified engineers looking after it 24×7 to ensure customer accounts remain online and secure, which is more important now than ever before as internet security threats are becoming increasingly sophisticated.’

Y-Cam has also said it will honour a separate three-year free cloud storage offer that was available to customers who activated their cameras between 15 June and 15 December 2017. The three-year deal was originally due to expire on 30 November but Y-Cam chose to extend it to 15 December to provide extra time to customers.

What to do if your Y-Cam is affected

Existing Y-Cam customers now have three options once their period of free cloud storage ends:

  1. Subscribe to the Y-cam Plus service, which offers 30-day storage and a number of alarm benefits for GBP9.99 a month or GBP99.99 a year (discounted to GBP4.99 and GBP49.99 for the first year).
  2. Subscribe to the seven-day storage plan for GBP2.99 per camera.
  3. Take no action and still receive notifications and be able to access live video and audio footage. However, the camera will no longer record.

As a comparison, the Netgear Arlo Q Premier plan, which supports up to 10 cameras and gives you 30 days of recordings, costs GBP6.49 a month or GBP64 a year.

The Nest Indoor Cam Standard plan, which gives you 10 days of recordings, costs GBP8 a month or GBP80 a year. So, while some customers might be unhappy that they have to pay for a service that was previously free, it is significantly cheaper than other popular camera plans.

Is this a one-off case?

Y-Cam is not the only smart security company to recently fall foul of customer backlash regarding free and paid-for services. Canary also changed the features that are included in its free and paid-for subscription packages, removing camera abilities that were once free and placing them behind a paywall.

We’ve updated our first-look Y-Cam Evo review[14] and Canary Flex review[15] to reflect the changes.

References

  1. ^ Best Buy wireless security cameras (www.which.co.uk)
  2. ^ @ycamsolutions (twitter.com)
  3. ^ November 30, 2017 (twitter.com)
  4. ^ @ycamsolutions (twitter.com)
  5. ^ pic.twitter.com/qzcEs6yf6H (t.co)
  6. ^ December 1, 2017 (twitter.com)
  7. ^ @ycamsolutions (twitter.com)
  8. ^ pic.twitter.com/uabPwDDMPk (t.co)
  9. ^ November 30, 2017 (twitter.com)
  10. ^ https://t.co/d95g7Jn5BI (t.co)
  11. ^ December 4, 2017 (twitter.com)
  12. ^ https://t.co/7f8VGNkyOF (t.co)
  13. ^ December 7, 2017 (twitter.com)
  14. ^ Y-Cam Evo review (www.which.co.uk)
  15. ^ Canary Flex review (www.which.co.uk)

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