Don’t fall for this pre-paid card trick

A Thomas Cook Cash Passport is still valid – but it has a sting in the tail

Credit card lets cardholders borrow funds with which to pay for goods and services depend on the condition that cardholders pay back.

If you have a Thomas Cook Cash Passport, the good news is that your money is safe.

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The bad news is that there may be less of it than you expected.

Cash Passport was a prepaid card to use abroad. It could hold either one currency, like euro or dollars, or several. Customers paid in sterling, which was converted into the foreign currency and loaded onto the card, which could then be used abroad.

Mary was surprised when she checked her Thomas Cook Cash  passport. She hadn’t used it since 2015, when it had a balance of €252.

Now, however, the balance was €108. She’d been hit by a monthly “inactivity fee” of €3 that, under the card’s terms and conditions of use, kicks in once the card hasn’t been used for 15 months.

After that, €36 disappeared off her balance every year she didn’t use it. Another three years and all her money would have vanished. Although she was still able to use her Cash Passport, despite Thomas Cook’s demise (it’s run by Wirecard) Mary decided to take out her €108.

That transaction would have been free to do at a branch of Thomas Cook, but now that they’re  closed a £6 “cashout” fee would be deducted from the final total.

Prepaid cards like Cash Passport can be expensive to use. Customers pay in pounds to load them up, but the exchange rate into the foreign currency is normally not as good as the Visa or MasterCard standard rates.

There can be a fee to get the card plus a monthly fee after that, as well as charges to top it up, use an ATM, or even spend with it.

Inactivity fees are common, as are fees to replace a lost card and fees to stop the card and take the money out.

Prepaid cards are not protected by the Financial Services Compensation Scheme and do not give Section 75 consumer protection on purchases.

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The cheapest way to spend abroad is to use a credit or debit card with no foreign usage fees, such as a Halifax Clarity credit card or a Starling Bank debit card, and always pay in local currency not sterling, if offered the choice.