American Express prepaid travel cards are no substitute for credit cards

Prepaid cards

• Activation fee: $14.95
• Reload fee: $5.00
• Foreign exchange fee: 3%
• ATM withdrawal fee: $2.50
• Printed monthly statement: $5
• Overdraft fee: $15
• Refund fee: $10

Let’s say you want to take €2,000 to Europe on a prepaid travel card. Assuming an exchange rate of €1 equals $1.20, here’s what it’s going to cost: to load your card with €2,000 you’ll need $2,400 (the maximum is $2,750), plus the $14.95 activation fee, plus the 3 percent, $72 foreign exchange fee, plus $2.50 for each ATM withdrawal. If you make four ATM withdrawals during your trip, the cost to access your own money is $96.95. The card has an expiration date, and if after that date, you haven’t used all the funds loaded into it, Amex will charge you $10 to issue a refund. In addition, certain types of purchases — gas at an automated pump, for example — are prohibited.

Our advice remains unchanged: to obtain cash overseas, get an ATM card from a bank or credit union that charges no fee for overseas withdrawals. That way the charge to access the same €2,000 is zero instead of $96.95. Even the ATM cards of Wells Fargo and Bank America, which charge $5 per overseas ATM transaction, are a better deal than this new Amex product. And even though most add a 3 percent charge for foreign transactions, for larger overseas purchases we still like credit cards. You can accumulate miles, and for a few weeks you get to use somebody else’s money.