At Prime Cap we refer to 'Currency Cards', such as they are and amongst other things, as aspects of a 'cash access' solution.
We advocate their use for a variety of foreign exchange scenarios and for that reason and, because of the extensive research we have conducted into this market.
So, are they worth it?
It depends what you want to achieve. Their premise, in the purest form, is simple - to 'load up' a standalone card with a foreign currency. You're putting a defined amount of foreign currency 'on' the card, or you are putting the foreign currency equivalent of a GBP amount on the card.
They can be used to withdraw foreign currency at ATMs and they can be used as payment method in establishments where the card's emblem is accepted.
Most providers do not charge you for withdrawing cash from an ATM, however, this will depend on the card provider and the bank that operated the ATM. Some cash cards come at a cost. This fee, usually £10, doesn't benefit or disadvantage you to any great extend.
One of the down sides of the classic type of loadable currency card is that the rate of exchange used to calculate the conversion prior to loading onto the card is on the one hand static and, on the other, usually no better than the rate you might receive from your credit card provider. The margin - mark-up/concealed commission - is not de facto more competitive on a currency card. You're essentially paying for the convenient of having a set and secure amount of currency digitally in the your wallet; nothing more. In fact, if you load up your card on a Monday and don't use it till pay for something until the Friday, then there is every chance that the rate might be better on the Friday. Meaning, although you know how many euros or dollars are on the card, you might have paid fewer pounds for that dinner out because the rate on Friday might be higher. Of course, it could be lower, but that is the risk you take.
Furthermore, if you have loaded on a certain amount of euros to your card and you don't spend them, converting them back to sterling wont necessarily be in line with the movement of the exchange rate. Usually, if you have converted £1 to euros on Monday at 1.10 and, come your return €1 is equal to £0.95 (€1.05 = £1) then the card provider will only convert back at the initial rate offered. However, if the rate has climbed then they will often calculate the rate for converting your unspent euros at the prevailing market rate plus their margin. So, the system is not actually as transparent as you might think. You're committing a set amount and, in the event it goes unspent, you're paying more than once and at a premium to get your initial spend back in your account. Not ethical if you ask us.
So, how do we avoid being stung of have to weather an unfavourable rate in the face of an improved underlying market? The answer is with one of two solutions:
1) . Use a debit card that does not charge you for use/withdrawals overseas.
This solution gives you a couple of different benefits. As suggested, you wont incur a charge when using it abroad. Additionally you haven't committed a fixed sterling amount to a product which wouldn't give you a fair return.
Often the rate of exchange you bank gives on debit or credit card transactions is better if not the same as that of a currency card. Sometimes it is rather improved. Furthermore, because your money remains sterling until the transaction occurs, you're working with live and changing exchange rates which stands to benefit you should the pound (or your base currency) improve.
Also, when using a credit card in this scenario, you're transactions are ensure, so, even if you card is stollen and used erroneously, you are liable. Sadly the same cannot be said for debit card, however, your travel insurance would cover any elicit activity in the case of theft anyway.
2). Use a multi-currency card like Revolut (www.revolut.com).
This is very very similar to using a fee free debit card, however, you move money from your bank account onto the Revolut card/facility. This way you're still in control of your budget. Revolut then draws on this balance when a payment needs to be made in a particular territory/currency.
The key things to question here are the rates at which your based loaded currency is converted. Also, what happens if you are somewhere without mobile data or WIFI and your card's balance runs dry?
Some info our those cards we think tick the boxes for both frequent flyers and casual tourists alike.
At the risk of sounding like Martin Lewis, the 'Money Saving Expert' we are not, but, we do like good service, fair cost and added benefits. This is why you'll notice the Amex Platinum card in the above rolladex. The inclusive benefits that come with this card are worth checking out regardless of whether you're travelling abroad or not. Our treasurer receive a message on his return from some far flung place to inform him that Amex has noticed that, given he used his card to pay for his hotel, had he booked it through their travel concierge he could have saved himself a further 20%. For what it gives you it is fair value and who doesn't love an airport lounge (research the Priority Pass to see what we mean)?
One of our clients uses these cash access solutions, one in particular, to pay an overseas employee. Relying as they do on certain free-lancers, in more remote parts of the world it can be difficult for individuals to acquire bank accounts; however, ATMS abound. Providing your intended recipient with a currency card and then topping that up online as and when you're inclined to pay them enables them to withdraw their funds in the local currency. Clever, quick and fair.
Prime Cap has no formal arrangements with any of the providers referenced above. We make any recommendations purely from a foundation of personal experience and accept no liability for loss incurred should our recommendations be relied upon by a third party in relation to the subject of this post.
If you would like to speak with one of our team about any of the ideas and explanations included in the post then please call one of our team on 02031728193.