Prepaid travel cards are great for managing currency on the road. But there is one situation where they can cost you money without it being obvious until it is too late.
What Happened in Las Vegas
I had both USD and EUR loaded on my card when I checked into a hotel in Las Vegas. The hotel took a security deposit, but because I did not have enough in one currency to cover it, the charge pulled from another balance automatically.
When the hotel released the deposit after checkout, it came back in USD. That meant converting it back to EUR, and losing money on the exchange spread in the process. A deposit that should have been neutral ended up costing real money due to currency conversion.
On top of that, hotel deposits can stay locked for several days after checkout regardless of how you pay.
Why a Credit Card Handles This Better
A credit card hold works differently. The bank places a hold against your credit limit rather than pulling actual funds from a currency balance. When the hotel releases it, nothing needs to be converted. Even if the hold takes a few days to clear, you have not lost anything in the process.
Cash is another clean option for deposits if you have the local currency available.
The Simple Rule
For hotel security deposits, use a credit card or local cash where possible. Save your prepaid travel card for day to day spending where you are in control of which currency you spend.
Have you been caught out by a hotel deposit before? Comment below.