I thought it was a good idea, get a prepaid debit card for my trip overseas. If it’s lost, nobody can get a hook into my regular credit card accounts. I looked around and found one called the PayPower Travel Card.
I bought the card at a retailer, my local grocery store, for $3.95 and then gave them some cash (must be between $20 and $500). Assuming you put the maximum, you just lost .79% of your money. Next, travel overseas. They tell you there’s a 2% foreign transaction fee, but when you get your statement, you see that there’s additional 1% Visa Currency Fee they didn’t tell you about. So we’re approaching 4%. Now it can be a little hard spending your card down to exactly zero. They will send you a check for the balance, but there’s a fee for that ($5.95). In my case I got it almost down to zero and a month anniversary passed. Well, having the card into the second month wins you another $5.95 monthly fee.
Let’s say that that $5.95 charge puts you in the hole (I was down $3.43). Can you just pay them what you owe? No. You have to buy a reload pack that costs another $3.95 with a minimum of $20 put on the card, which in this case means you have to spend down exactly $16.57 in your second month. Now you can’t just go to an ATM and get the money out. There’s a $1.95 ATM withdrawal fee ($3.95 overseas), but that is in addition to the ATM’s own fees and network fees which if you underestimate puts you back in the hole again and requires yet another $3.95 for another reload pack. Even a balance inquiry is $.50 on top of whatever the ATM charges ($3.95 internationally).
So let’s add up the cost of the $500 debit card, held for 32 days, and spent overseas:
- Initial cost $3.95
- International transaction fees $10
- Secret international fees $5
- Monthly fee $5.95
- Reload Fee $3.95
Total: $28.85, or 5.77%
I consider that a rip off.
The scenario above is not exactly what happened to me because I actually have two PayPower cards and one of them didn’t go into the hole. I was able to transfer money between the cards at no fee and to avoid the reload. Closing a card is a time consuming task that you have to do over the phone, giving your card number and identifying information twice. They can’t actually cancel it, but “open a ticket” and then you are supposed to wait a couple of days and call back to make sure it was canceled. It takes several minutes for them to open the ticket.
The two things I guess that are the most unreasonable about the card is the excessive monthly maintenance fee (it costs less to buy a new card and keep it a month than it does to keep the same card for a month) and the inability to reload it without a significant additional fee. One would think that a “travel card” would have some advantages for foreign travel, but actually its foreign transaction fees when the secret Visa fee is added are not any better than other cards. Here is an article about better deals on pre-paid debit cards.
Seasoned travelers tell me to get a credit card (a Capital One card with no foreign transaction fees is most often mentioned) to use only for foreign travel. Take it and a debit card with you, leaving the debit card in the hotel safe unless needed. I think most travelers take a considerable amount of cash also, kept in the hotel safe except for a small amount to carry around. US dollars work with street vendors in many countries, and it’s usually not hard to exchange them for the local currency, bypassing ATM fees. Shops will likely take the credit cards. Discover Card doesn’t work in many countries and I suggest sticking with Visa.