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Friday, December 12, 2003 - Page updated at 12:00 A.M.

Prepaid plastic grows attractive for travel money

By Jane Engle
Los Angeles Times

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The traveler's check, a standard vehicle of the security-conscious tourist for more than 100 years, is getting new plastic wheels and vrooming into ATMs. You may want to give it a test drive on your next trip.

The electronic version works like a prepaid gift card, a magnetic-striped card loaded with money. As you spend it at shops, hotels and restaurants or insert it into ATMs to withdraw cash, its value decreases.

Last year, $250 million worth of travel-oriented prepaid cards were sold. Sales are expected to increase by nearly 50 percent this year, according to the Nilson Report, a newsletter that tracks the industry. By contrast, worldwide sales of traveler's checks slid from more than $58 billion to less than $32 billion over the past 12 years, the newsletter reports. In time, the cards may partly or completely replace traveler's checks.

Among recent developments:

• American Express, which began selling traveler's checks 112 years ago and claims nearly 70 percent of the market, in October started offering a TravelFunds Card. It can be loaded with as much as $2,750 and used at ATMs and stores that accept the American Express card.

• AAA last January expanded a pilot program for prepaid travel cards, and now most of its 77 affiliated clubs in North America offer it, says Gail Acebes, director of partnership programs. You can load as much as $10,000 onto the Cash Passport card and use it at Visa ATMs and stores on the Interlink system.

There are several reasons to consider slipping a prepaid travel card into your wallet, along with your usual portfolio of cash and debit and credit cards, before going on a trip. These include theft protection, security, budgeting and convenience.

Unlike debit cards, prepaid cards don't provide access to your personal bank account; you use a separate PIN to draw on a virtual account. If a thief acquires your card, he or she must first know your PIN and then can withdraw only what is left on the card — not drain your bank account. Issuers typically promise to promptly replace funds on stolen or lost cards if you report the loss immediately. American Express and AAA offer other services with travel cards, too, such as help in replacing lost or stolen passports.

The cards can also help you track spending and avoid blowing your vacation budget, even though you generally can reload them by calling a toll-free number. These advantages are shared with traveler's checks, of course, but unlike the checks, you can use money cards at ATMs.

Before you order a prepaid card, check out the fees. American Express, for instance, charges $5 to reload its TravelFunds Card and, starting Jan. 1, $14.95 for the card. (It's free now.) AAA's Cash Passport is free to AAA members who load $300 or more onto it.


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