There are all kinds of concerns when it comes to financing a vacation. We want to make sure we’ve saved enough money, budgeted, and stay safe while spending abroad. This is easier said than done for some people that struggle with money. And that’s where a prepaid debit card may be helpful.
What are prepaid cards and why are they so useful?
A prepaid debit card is a lot like the debit card you use for day-to-day transactions. The main difference is that you can load a specific amount onto the card for a fixed spending limit. This alternative approach can be useful for travelers for the following reasons.
1. Prepaid cards are all about controlled spending
This is essential for travelers with minimal self-control. Self-control is hard to come by when traveling, too. Most travelers throw it out the window once they touch down and find things like duty-free stores. With a prepaid card, you load the card with a specific budget before you travel. This way, you can use it during your vacations and keep things simple. Whatever you have on the card is all that you can spend.
Some travelers will say this is far too restrictive. After all, vacations are about treating ourselves with a few impulse purchases, right? This is true, but the shine on that expensive souvenir soon wears off when we return to credit card debt. Prepaid cards mean that even though there is a limit, you know where that money came from and where it is going.
2. This controlled spending means that there shouldn’t be too many nasty surprises
Prepaid debit cards are great for those that like to keep it simple. You can live entirely in the moment when buying dinner or a ticket to an attraction. There’s no worry about overspending, falling into overdrafts or racking up excessive debt.
But, we must point out the risk of fees. These fees shouldn’t be nasty surprises to anyone smart about their purchases. So be ready to read the fine print. Still, they can add up – as is explained by the Washington Post.
Fees can include all or some of the following:
- Adding money onto the card
- Checking the balance of the card at an ATM
- For the initial activation
- For other services, such as customer support
It all sounds pretty painful when listed like that, but don’t worry too much. Not all card providers charge the same fees or the same rates. This is why it pays to compare options and details before committing to a card.
3. There may be a strict limit on the amount spent, but not on the purchases you can make
There are lots of places that will accept prepaid debit cards. Let’s not forget, they come from reputable providers. Visa and Mastercard, for example, have prepaid cards that you can use around the world. This means easy payments for:
- Hotel rooms
- Restaurant bills
- Pretty much anything else that takes your fancy that isn’t from a questionable vendor
4. The best prepaid cards are easy to use from any location
Some credit cards and debit cards can have a short delay between payments. Hotels and other establishments may allow a payment, but it might not go through for a few days. This can be a problem when planning expenses while on vacation.
These prepaid cards are much faster and more reliable. This, in turn, helps to improve money management and reduce stress. It should also be simple enough to reload the card if needed, thanks to mobile apps and other services.
We don’t want to sway you on a particular company or brand of prepaid card – you need to find the option that suits you. But, we do recommend that you take a look at this video from Visa on YouTube. This video runs through the basics of activating and loading money onto a prepaid card. (We’ve also provided the available options to load cash into a guide for you.)
Visa is a popular choice in prepaid cards because the company is recognized across the world. It’s easy to use the cards for payments in foreign countries, especially at global chains. Most ATMs should also accept these cards for withdrawals without any problems.
5. There are also benefits here for younger travelers
Our kids are growing up fast, and they want to see a little more of the world. Or, perhaps just something beyond state lines. Maybe they want to take a little road-trip with friends, or head to a festival somewhere? Naturally, they will expect the bank of mom and dad to finance the trip.
There are four options here:
- Give them a load of cash that is within a suitable budget
- Provide them with access to a credit card for the week/weekend
- Tell them to finance the whole thing from their own pocket
- Give them a prepaid debit card
The best answer depends on how money-savvy your kids are, and how much you trust them. Are they likely to lose the credit card (which can lead to a whole heap of trouble) or leave the cash behind in a hotel room? Is it too risky to leave them to survive on what minimal funds they have of their own?
Prepaid card expert Curtis Arnold wrote a guide for the Huffington Post back in 2014. The advice on teaching kids about money habits via prepaid cards remains true today. They are a great safety net for teens out on the road for the first time.
Are prepaid debit cards the best option for you?
Many experts advocate prepaid cards as more of a backup plan or secondary option. But, this might not be enough of an incentive to follow a strict budget. It is too easy to reach for the credit card if it is an option.
These prepaid cards aren’t for everyone – not with all those fees involved. Yet, they can teach younger travelers something about money management. And appreciating that vacation money they worked for is a great lesson. Consider this option when budgeting for your next foreign trip. Or, for any teenagers planning a big adventure.