Prepaid debit cards are available everywhere! Go to any Walmart, Walgreens, Target or even the neighborhood gas station and you will see displays for these seemingly savvy debit cards. They all promise basically the same thing: the convenience of a debit card without age restrictions and a credit check. Simply preload the card with cash and use it anywhere a credit or debit card is accepted.
All of this sounds smart, but there are some drawbacks that could cost you a whole lot of money. All of these cards come loaded with fine-print contracts imposing charges and fees for each use. There are often fees associated with each ATM withdrawal, each credit transaction, each reload of funds, and even each balance inquiry. Furthermore, the issuing bank will charge a markup percentage for each transaction made in a foreign country. So with all this negative cash flow, what makes the card appealing for the European traveler?
A prepaid debit card may be the logical choice for a student under the age of 18 years traveling to Europe. Most financial institutions will not issue a true debit card to persons under 18 years of age. They will usually issue a ATM card instead. These ATM cards do not carry the VISA or MASTERCARD logo and always draw funds from a savings account, not a checking account. However, ATM machines in Europe only accept debit cards which draw funds from a checking account and have a four-digit PIN number associated with it.
The best bet for getting cash from an ATM machine in Europe is a debit card issued from your local bank that draws funds from your checking account. This transaction entitles you to the best bank-to-bank exchange rates and normally has no ATM withdrawal fees issued from your bank. If you have a debit card that you use regularly in the United States, take it to Europe with you and use it to make purchases and to get cash from an ATM machine. Leave your credit cards, traveler’s checks and US dollars at home.
If the first alternative is not possible, then this plan may be your best bet. PAYPAL offers student accounts with adult monitoring services, as well as adult accounts. PAYPAL is a very reputable and established financial institution. Simply visit http://paypal.com and open an account. Request a free debit card, load money into your paypal account from a bank account, and begin spending. This PAYPAL debit card offers many of the benefits of a local, bank-issued debit card. It has a Mastercard logo, uses a four digit PIN, and is recognized at ATM locations worldwide. Additionally, the fees are minor compared to prepaid debit cards, perhaps $1 per ATM transaction, 1% fee for foreign ATM transactions, and a foreign currency mark-up of about 2.5% the current exchange rate.
The third alternative would be to invest in a prepaid debit card such as Visa Buxx, which can be found at http://usa.visa.com/personal/cards/prepaid/visa_buxx.html . This card comes with all the benefits and drawbacks I mentioned above. If you must travel with cash or traveler’s checks instead of an ATM Debit card, then you can look into getting a prepaid debit card.
The bottom line is to make sure you are well prepared to travel financially. Heading off on a trip with a credit card, cash and traveler’s checks are a sure way to lose money! Save yourself time, effort, and plenty of headaches by getting an ATM debit card before your next trip. You’ll enjoy a better exchange rate, fewer fees, and the security of knowing how much money you are spending on your trip.