Travellers with a Ukash prepaid card will be hit with a raft of new charges from April. But they WON'T have to pay if they want to cancel the card before then, as the firm's now backtracked on plans to charge a £9-£11 closure fee.

Ukash was one of our top pick prepaid foreign-currency cards as recently as May 2015, though since it's been taken over and has been bettered by other deals (see Prepaid Travel Cards for our current top picks).

It's a prepaid Mastercard you can reload and use to spend in euros or dollars when travelling. It doesn't currently have any monthly or sign-up fees, or any fees for purchases or ATM withdrawals.

However, Ukash cardholders have now been told that from April they will have to pay a series of new fees, and will be charged for transactions that were previously free.

Many Ukash users contacted us earlier this week furious at the changes – particularly given that according to its current terms and conditions, they faced a €12 (£9.40) or $17 (£11.90) fee to close the card. Several who contacted Ukash customer services to query this say they were told they would have to pay the charge, and when we spoke to Ukash's card issuer on Monday (15 February) we were also told the closure fee would be charged.

But Ukash has now told us that cardholders who close their account before 10 April will NOT be required to pay exit fees, and has admitted it should have communicated this better to customers.

What are the new charges?

Cardholders were told in an email last week that the following new charges will apply from 10 April:

  • Monthly fee of €1.20 (90p) on the euros card, $1.40 (£1) on the dollars card.
  • ATM fee of €2 (£1.60) or $2.50 (£1.80) per withdrawal.
  • Point-of-sale fee on purchases, of €0.50 or $0.60 (40p).
  • Inactivity fee applied if unused for 60 days+ of €5 (£3.90) or $5 (£3.50). This fee will be charged around the 5th of the month – the 60-day clock only starts when the fee comes in on 10 April, so the first charge would be around 5 July.

It's worth noting Ukash actually offers two prepaid cards – the 'Travel Money Prepaid Card' and the 'Prepaid Mastercard'. The 'Travel Money Prepaid Card' was our top pick as its fees were less than the 'Prepaid Mastercard', but the new charges apply to both.

Ukash U-turn over closure charge as prepaid travel card adds fees
Ukash U-turn over closure charge as prepaid travel card adds fees

Closure fee confusion

After the changes were announced last week, a number of users contacted us saying they were unhappy with the move. David wrote: "Ukash are now charging for using their service. In one action they've made themselves one of the most unattractive cards on the market."

And Pauline emailed: "Like other forum readers I've had an infuriating email about my Ukash prepaid euro card... What their email completely fails to mention is that Ukash still intends to charge €12 for card account closure."

When we contacted Ukash's card issuer Prepaid Financial Services on Monday morning (15 February) we were told the closure fee would apply. A spokesperson told us those wishing to close their account should "call customer services and request their card to be closed with the closure fee being applied".

Though Ukash now says it never intended to charge users who wished to cancel the closure fee, and in fact it began emailing some customers on Monday afternoon to inform them they wouldn't have to pay if they left before 10 April.

A spokeperson told us on Wednesday (16 February): "This decision was actually made at the same time as the decision to raise fees and, in hindsight, should have been communicated more effectively to both the customer service team and the card issuer.

"We issued additional communication to cardholders specifically to ensure that all consumers were aware of the right to leave without a fee being charged as soon as we realised that this was not clear from the emails we received from cardholders."

However, even after this additional communication some customers still seem to have been given inaccurate information. One MSE user, Ann Broom, told us today (17 February): "We received an email last night saying that they won’t charge us to cancel the card, so we have done just that. It took two phone calls yesterday with them and we were given different information. A couple of hours later we got the email."

Why is Ukash bringing in fees?

Neltac Ltd, which operates the Ukash card, says the reason for the new charges is the EU cap on 'interchange fees' – which retailers pay to card firms when cards are used.

A spokesperson says: "New interchange regulations mean the schemes earn less on interchange and overall earnings drop.

"The real focus ought to be on why the card schemes have allowed ATM fees to rise so significantly. The impact is not just felt by prepaid programmes – it is the same for high street banks and card issuers generally.

"Whilst it has been a difficult decision to make these fee changes and we take no joy whatsoever in having to do so, only four fees are being changed and the changes are being made with two months' notice."