Virgin Money launches prepaid currency cards
Virgin Money has entered the currency card market with the launch of two prepaid cards, which can be loaded with sterling and converted directly into US dollars or euros, commission free.
The prepaid currency card market has really taken off this year. The cards offer a cheap way of spending cash abroad, and avoid the high charges foreign exchange vendors or UK banks can add on. They are also safer than travellers' cheques or carrying cash.
Virgin says its card is unique, compared to other cards on the market, due to the spare emergency card issued, so if your main card was lost or stolen you can activate the back-up card.
The cards are free to apply for and use for buying goods but there are fees if you withdraw money from an ATM. If you're withdrawing in your card's currency it's a €1.50 charge or $2 charge, and if it's another currency it's 3.5% on top of these fees.
The only countries you can't use the card are Cuba, Burma, Iran, Sudan or North Korea.
As with other cards, Virgin makes money through the exchange rate it sets, however it stresses: "The exchange rate changes with market fluctuations. It compares favourably with high street banks, travel agents and airport FX providers."
Scott Mowbray, Virgin Money spokesman, adds: "The cards are a safe, smart and convenient way to manage your money when travelling in Europe or the US, and are more secure than cash and if you do lose your card we provide a back-up for peace of mind."
Cardholders can use the card wherever they see the Visa sign and Virgin also offers discounts for its other products, such as Virgin Wines, when using the prepaid card.
Caxton FX is another prepaid card supplier on the market and it is one of the few cards not to have ATM charges. Duncan Higgins, currency market analyst at Caxton FX, says the popularity of prepaid cards is rising as people are realising that extortionate exchange rates and expensive fees are fast becoming dated.
He thinks it's a positive sign Virgin has entered the market as "having such a big name as Virgin popularises the idea of the prepaid cards, which can only be positive".
However, Higgins points out that the Virgin card does charge quite significant ATM fees, compared to Caxton FX's no ATM fee policy, and "an array of other undercover fees".
A debit card that works in the same way as a pay-as-you-go mobile: you top it up with cash and then use it just as you would a normal debit/credit card. Although some are badged Visa and MasterCard, pre-paid cards are not a credit card; you can only spend what you load. Prepaid cards are aimed at people who might not traditionally hold bank accounts – children, teenagers, people with poor credit ratings, migrant workers, and benefit claimants – and there are no credit checks on the applicant.
The difference between two currencies; specifically how much one currency is worth relative to each other. For example, if £1 is worth $1.50, converting sterling to US dollars, the exchange rate is 1.5. Converting dollars to sterling at those levels, the exchange rate is 0.66, so $1 is worth 66p. There are a wide variety of factors that influence the exchange rate, such as a country’s interest rates, inflation, and the state of politics and the economy in that country.