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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[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.


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  2. ^ Facebook (
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  4. ^ Which?

    Money Magazine (

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

Tesco Bank cancels credit cards weeks out from Christmas

Christmas present-buying hits its peak in mid-December – but for Tony Foster and a raft of other Tesco Bank customers, shopping plans were scuppered after Tesco Bank cancelled their credit cards without warning. Mr Foster, along with other Tesco Bank customers, received a text message last Wednesday saying their credit cards could no longer be used and would be replaced in 7-11 days. Tesco Bank said the cancellations were an anti-fraud measure, as a result of a ‘third party compromise’ – though it did not explain the nature of the ‘compromise’ or the identity of the third party.

Just a small proportion of customers were affected, according to Tesco Bank – though The Sun is reporting a number ‘in the ‘hundreds’. Which? explains what happened and what you should do if you’re affected.

Why are Tesco Bank cards being cancelled?

Tesco Bank said the cards were cancelled as a precautionary measure to protect customers’ accounts.

It acted after receiving notification of a ‘compromise’ at a third party organisation unconnected to Tesco Bank. The credit cards were cancelled with immediate effect. New cards were issued, and are expected to have reached customers by the end of this week.

Tesco Bank also urged customers who had noticed fraudulent activity on their accounts to call the bank immediately. However, it could not confirm whether data had been compromised, or whether customers’ personal details had been accessed. A spokesperson for Tesco Bank said: ‘We take the security of our customers’ accounts very seriously and take every measure possible to protect customers from fraudulent activity.

‘As a result of routine industry-wide fraud protection measures, we have reissued a number of credit cards as a precautionary measure. We apologise to our customers for any inconvenience caused as a result’. Below is the text message customers received.

No credit card three weeks from Christmas

The cancellations left Tony Foster without any access to a credit card – both his and his wife’s cards were cancelled, and Tesco Bank is their only credit card provider.

Mr Foster now worries that his details may have been exposed by a security breach. To make payments online, Mr Foster has been forced to use his Visa debit card, which he fears may leave him vulnerable to other security issues, or even fraud on his current account. For Mr Foster, one of the major draws of Tesco Bank is their Clubcard loyalty scheme.

To earn points, he puts most of his monthly card payment expenditure through Clubcard. This month, he says he’ll miss out on at least a weeks’ worth of points. He’s also unsure how to manage subscriptions linked to his now defunct card which are payable this week, or refunds that need to be processed through the cancelled card.

What to do if your card has been cancelled

If you find yourself without a credit card, especially in a busy shopping period, you can take the following steps:

  • Be wary of using your debit card online. Credit card purchases are covered by s75[1], allowing you to claim back your money if things go wrong with a purchase.

    Debit cards don’t attract a similar level of protection from card providers – so exercise caution, especially when buying from overseas or from sites you’re not familiar with.

  • Monitor activity on your credit card. It’s good practice to keep an eye on your credit card bill so that you can spot any unusual activity. If you do find a payment that you didn’t authorise, notify your credit card provider immediately[2]
  • Keep track of your payments. If you have payments linked to your credit card, make sure you’re aware of them, and arrange an alternative payment option
  • Avoid personal loans or overdrafts with high interest. If you’re left in the lurch financially, you may be tempted to dip into your overdraft[3] or take out a personal loan.

    But the interest on these products can escalate quickly and leave you even worse off.

    If you do decide to go down this route, make sure you fully understand how much interest will be payable – and have a clear plan for paying off your debt.

Want to find the best credit card for your circumstances?

Which? has reviewed credit card providers[4] to find the best deals.


  1. ^ Credit card purchases are covered by s75 (
  2. ^ notify your credit card provider immediately (
  3. ^ overdraft (
  4. ^ reviewed credit card providers (