Are pre-paid currency cards safe?

Annie Shaw / 26 October 2016

Annie Shaw answers a reader’s question about whether pre-paid currency cards are a risk if lost or stolen.



Question

I use a pre-paid currency card when I travel abroad, as I find it useful to know what exchange rate I am getting on my holiday spending from the outset. 

However, on a recent trip to the USA I was alarmed that retailers seemed never to ask for a PIN, and the one time someone asked for a signature they didn’t check it against the card. 

Are these cards safe? What happens if my card is stolen or cloned?

How to combat card fraud

Answer

 The USA is notorious for its ‘swipe and go’ attitude to credit cards – although retailers are more fastidious on PIN use with debit cards.

Yes, the cards can be cloned, although, unlike a credit card, where withdrawals can be virtually limitless, the amount that can be spent cannot exceed the amount ‘loaded’ onto the card. 

The downside of pre-paid cards is that it can be much harder, if not impossible, to get a refund on a misused card than on a credit card, and you have none of the protections of Section 75 of the Consumer Credit Act in the event of supplier default. However, the issuers of pre-paid cards usually have various protections.

How to get a good deal on holiday money

The Post Office card, for example, has a mobile phone app that records withdrawals and tracks your balance, not least to indicate when you need to top up, and this should alert you if something is wrong. 

Some cards even let you block and unblock your card via the app to prevent unauthorised use in between transactions – useful if you might mislay the card and not notice for some time.

I wouldn’t be put off using a pre-paid card altogether by the security issues but, as with all payment systems, you should be aware of the risks and take measures to avoid them.

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Read Annie Shaw's money articles every month in Saga Magazine.

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The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.