Prepaid Card Information Library
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PREPAID CARDS
The alternative to a credit card – read key facts on prepaid cards below.
What is a Prepaid Card?
Need to make payments and transfers with a payment card but want to avoid borrowing or tumbling into debt? A prepaid card might be the perfect solution: it carries many of the positive features of a credit or debit card but without the line of credit or borrowing facility!
A prepaid card works similarly to a 'pay as you go' mobile phone. The user simply loads up the card up with a desired amount of money. Now the card is ready to be used – in shops, restaurants, for cash withdrawals and online shopping.
Once the funds on the card have run out, it is up to you to top it up again.
What are Primary and Secondary Cards?
In many cases, you can order a primary and secondary card. The primary card is loaded up with funds which can then be accessed by the secondary card.
This is ideal for sharing money with family and friends – parents can give a second card to the kids so that they always have access to money, but the amount is controlled by mum and dad! You can also share money with people in other countries – perfect for people working in the UK whose family is based overseas.
Who Issues Prepaid Cards?
Prepaid cards are issued by the main debit/credit card companies – so you will see the MasterCard®, Visa® or Maestro® logo on the card. But hang on – doesn't that mean it's a credit or debit card? In fact it doesn't, but it does mean that the card enjoys a very wide acceptance level.
Even better, you can use the card in many other countries too – but check if there are any rates and charges for overseas use. Some cards carry special overseas features (such as zero fees on ATM withdrawals) so look out for these.
Who is Suitable for a Prepaid Card?
Because of the lack of borrowing facility offered, credit checks are not carried out and a much wider range of customers can apply successfully. Here is a list of people who are suitable for a prepaid card:
- Pretty much everyone!
Some cards are even available to under 18s. It really doesn't matter if you are a student, unemployed, self employed, newcomer to the UK, suffer debts and arrears – a prepaid card cannot lead you into debts.
Where can I top up my Prepaid Card?
Prepaid cards have many top up options and sometimes these vary according to the provider. Most of them allow you to top up for free at Post Office® branches, by bank transfer, SMS and online. Check which options are offered when you are browsing for a card provider.
Are there any Fees?
There are one or two fees involved in using a prepaid card. However, given that interest fees and debt risk are not features, these are pretty minimal.
Here is what you can expect to pay for (note that some don't apply to all cards):
- Initial card cost
- Purchase fee
- ATM withdrawal fee
- Monthly management fee (though this only applies to some cards)
The initial card cost is usually around £5 to £10 and is a one-off fee for buying the card. Purchase and withdrawal fees are similar to what you might find on a credit card, but won't always apply – have a good look at our prepaid cards comparison page.
The monthly management fee only applies to some card types – in exchange for this regular fee you mgith get other boosts (such as no charge for purchases) and other benefits. Other cards are just 'pay as you go' and won't carry a monthly fee.
What are the Benefits of Prepaid Cards?
Prepaid cards have many benefits. You can improve your budgeting, share money with family, spend online (not possible with cash!) and control you kids' spending by using a prepaid card. The fact that there is no chance of borrowing is also great news – you can spend and know that you can't go 'into the minus'. Here are the main plus points:
- Less restricted than credit/debit cards (even under 18s can apply in some cases)
- No debt risk
- No credit checks
- Worldwide acceptance
- Online shopping, transfers all possible
- Budget management
Many cards extra features such as budgeting tools, cashback and even purchase protection assistance.
Are there any Risks?
It would be tricky to find any major risks in connection to prepaid card use. One aspect to bear in mind is that any fees the card does carry will be deducted straight from the card balance – so you must make sure there is enough balance on the card to cover your purchase and any additional fee.
If you try to make a purchase and there is not enough on the card to cover it, your card will be rejected. It is then up to you to top it up with funds again.
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Latest News - 16 May 2012
 Trade Deficit Shrinks As UK Exports Grow 15 May 2012 12:30pm The UK's trade deficit on goods and services was £2.7 bn in March, compared with £2.9 bn in February, while the deficit on goods was flat at £8.6 bn. Exports of UK goods climbed by 5.8% to reach £26.4 bn for March, despite signs of significant weakness in the Eurozone. Read More >> |
 Prepaid Cards Can Help You Budget Better08 May 2012 17:00 If like thousands in the UK you need to stay in more control of your spending then you should consider a prepaid card.The main advantage of a prepaid card is that it allows you to keep better control of your finances because it gives you ability to personally manage the amount of money on the card. Read More >> |
 UK Economy In Double-Dip Recession26 April 2012 17:30 Britain has fallen into a double-dip recession, the Office for National Statistics (ONS) has said, after that the UK’s economy contracted by 0.2% in the first quarter of 2012. Read More >> |
