With their stipulated limits, prepaid travel cards are a great way of staying within your budget and restricting your purchases, a feature that credit cards do not have. They also have many other benefits, both at home and abroad.
Multiple currencies make travelling easy
In this age of stopover flights and multi-country holidays, travellers may need to change their dirhams to local money for something as simple as a meal or a cup of coffee. Many prepaid travel cards now allow users to carry balances in multiple currencies. RAKBank’s dual currency card comes with dirham and dollar currency wallets. While your dirham transactions will be billed in dirham , all your non-dirham transactions will be in dollars.
Exchange rates can be predetermined
Most multi-currency cards allow users to lock in exchange rates before a trip, thus avoiding large-scale fluctuations, and serving as a hassle-free hedge while travelling or shopping abroad. Al Ansari Exchange’s AAE travel card and Emirates NBD’s Globalcash card both offer the feature.
Teenagers can use them easily
Most banks and financial institutions require applicants for credit cards to be at least 21 years of age, if not on their own work visa. Prepaid cards sidestep that requirement and are ideal for students travelling on their own, to international summer camps, for example.
Sending money home becomes easier
Most prepaid travel cards have multiple uses. On cards issued by exchange houses, it is also possible to remit money to friends and family overseas.
Expenses are easier to manage
Prepaid cards can help travellers stay under budget. Once the amount loaded on to the card is finished, it cannot be used for payments, unless it is topped up again. This feature prevents high-value impulse purchases for those who are inclined to max out their cards.
Some cards can be suspended after one trip and reactivated before a future trip, for up to a period of five years. This temporary lock, usually activated via the internet, ensures the card cannot be used in between trips, and consumers do not stand liable for inactivity fees.
Prepaid cards are safer than debit and credit cards, issuers say, since they have a limited value and are not linked to bank accounts. If a card is lost or stolen, hackers would only be able to use the amount loaded on the card.
Visit visas are free
Some prepaid cards also come with free travel insurance that is compliant with Schengen visa requirements. In the case of the Gocash card, this service is provided by Oman Insurance.
With a wide variety of advantages as compared to credit cards, there nevertheless remain some disadvantages. These include:
Pay a fee
In most cases, users spending or withdrawing money abroad are likely to be charged a fee. It is advisable to check with your issuer before purchase, as the terms and conditions vary from card to card. The Gocash card, for example, charges users a cash withdrawal fee of $3 (Dh11) per transaction, but does not charge for transactions.
Spending limits may prevent high-value purchases. Spending is restricted to the limit on the card. In an emergency, it helps to have a second card at hand. You can top up the card online or via an app, but it may not always be possible.
Current market rates apply in some cases
Customers can lock in foreign currencies at preset exchange rates, but those who forget to top up international currencies before making a purchase may be liable to spot rates as the transaction will be effected according to the pre-decided currency priority.
Use it or lose it
Unlike credit cards, you must use up the entire amount loaded on to the card before the expiry date. Unused amount may be forfeited if not claimed within a specified time.
Contact details aren’t always protected
A careful reading of the fine print on most cards indicates that those who sign on for these cards may agree to be contacted by the issuer’s business partners to assist in customer enquiries, as well as in marketing products.
Finally, associated rewards and discounts obtained by using these cards may not be as hefty as those achieved when swiping credit cards.