News & Views - Savantor

Prepaid v Credit/Debit

Tuesday, 31 July 2012

The popularity of prepaid cards is currently soaring, with many people turning to them in specific circumstances such as holidays instead of more traditional credit and debit cards.  As we enter the main UK holiday season a couple of surveys highlight the issues involved in using cards abroad and the apparent confusion the UK public have on whether to use prepaid cards abroad.  The Post Office is warning holidaymakers about the charges for using their credit cards abroad; which they say could see people hit with £135 million in unnecessary fees.  Their survey showed that last summer,

·         49% of holidaymakers used their credit card abroad, spending on average £463 each.

·         Men (56%) are more likely than women (42%) to splash out on plastic while on holiday, spending £494 compared to £428 spent by women.

·         24% are unaware of the amount their credit card provider charges for overseas transactions.

Older holidaymakers tend to be more spending savvy with those over 55 incurring an average fee of £5, compared to £23 racked up by 18-34 year olds.  Holidaymakers' biggest spend was on nights out (34%), closely followed by visiting attractions (33%) and shopping in duty free (32%). 14% of holidaymakers used their credit card because they ran out of money.

This survey coincides with another by Travelex focusing on the use of prepaid cards abroad.  The findings revealed that 77% of respondents taking a holiday abroad this summer will use a credit or debit card to fund purchases or withdraw cash – while 48% said they had deliberately chosen not to take a prepaid card after being left confused about which one to choose. When questioned, 41% cited that choosing a prepaid card was “extremely difficult” while 68% revealed they couldn’t work out the best value card. In the study, not being able to understand the charges, or how to compare prepaid cards, were cited as the most common reasons for the confusion among holidaymakers. Interestingly 25% of holidaymakers don’t realise they are incurring fees and charges using credit and debit cards abroad.  There seems to be a clear case for a uniform method of displaying prepaid card information to make it easier for consumers to choose the right card.

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