Using payment cards when traveling abroad

A few weeks from now, I will be spending two glorious weeks in Scotland, England, Germany, France and possibly the Netherlands. England is the only European country I've visited before, and I am beyond thrilled to explore this part of the world. What I am not excited about, however, is the money situation.

First, Scotland and England both use the pound sterling as currency, but each country prints its own banknotes. They are generally accepted in either nation, though some English merchants won't accept Scottish banknotes. All the other countries I'm visiting accept the euro. If I'm using my credit card, the monetary unit shouldn't matter since the card takes care of conversions to local currency, but we will be staying in some very rural areas where merchants may not accept plastic. That means I will surely need some cash, and will be coming to England with some Scottish money that may or may not be accepted.

Additionally, when you travel out of your state or country, your credit and debit cards often get blocked due to "suspicious activity." This happened a few months ago to my colleague Connie Prater when she drove cross-country to visit family. You can call your bank ahead of time and have them place a note on your account making them aware you'll be in foreign countries, but that doesn't always help, as exemplified in a Consumerist article (the guy had problems overseas with the same bank I use…not promising).

Then I read in the Wall Street Journal about a new prepaid debit card, the Cash Passport made by Travelex, which for U.S. consumers comes in either euros or pounds. It is specifically made for spending abroad. Money is loaded onto the card before the trip and can be used at millions of ATMs and retailers across the globe. The card can also be used online if desired.

The trademark feature of the card is it locks in the currency conversion rate when you buy the card. This is fantastic if the dollar is weaker by your travel date. But if the dollar gets stronger just before your trip, you're stuck paying a higher exchange rate than necessary.

Issued by both MasterCard and Visa, the Cash Passport does come with a few excellent features. You can access your account online, where you can check your balance, reload money, view transaction history or change the PIN. You receive 24/7 emergency assistance if the card is lost or stolen and the card comes with a PIN for extra safety. You are also provided a budget calculator to prepare your budget in your home currency.

If I was going just to the United Kingdom or just the European Union, I would certainly consider using this card, but I am going to both parts of Europe, so I would need two separate cards: one for euros and one for pounds. Here's the other thing -- it is a prepaid card. My trip starts in Scotland and England, so say I load my pound card with $700 U.S. What happens if it's time to move onto the E.U. with my euro card, but still have remaining money on my pounds card? I'd have to withdraw the rest of the pounds on an ATM machine and have them converted to euros. Not that painful, but definitely an extra step that can add fees.

Speaking of fees, the ones that come with this card are pretty steep. It costs between $2 and $2.50 U.S. for every ATM withdrawal. Additionally, the minimum amount you can load on your Visa is $200 and MasterCard is $250. If you are about to leave the country you are visiting and want to load just a small amount on the card for your last day or two, tough luck. Reloads are limited to 24 times if you get the MasterCard and are unlimited for the Visa. You can hang onto the card after your trip for future journeys, but be aware that you will be charged $1.25 a month for 12 months of inactivity with the Visa, and $2.50 a month after seven months of inactivity with the MasterCard. The fees vary quite a bit between the payment networks, but I was unable to find out whether you get to choose which one you want.

While I love the idea of this card, it just isn't logical for me. I would need two separate cards and would hate to be slammed by the fees and minimum reload amounts. I hope more travel payment cards are created in the future, especially since we are an increasingly cashless society. American Express once carried a travelers cheque payment card, but as of Oct. 31, 2007, it was discontinued. Until a better traveling card exists, I'm using my brand new Capital One card because it has zero foreign transaction fees.

Have you encountered any problems with your payment cards overseas? Any tips or suggestions?