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Compare Prepaid Credit Cards

Please note balance transfers are subject to 2-3% handling fee


Prepaid Credit Cards

Prepaid cards are becoming more and more popular among consumers in the UK . They are designed to be used as a safer alternative to cash and offer customers the chance to take a greater degree of control over their finances.

How do they work?

Although prepaid cards are relatively new in the UK, the concept of prepaid is far from a new idea. Prepaid phone cards and prepaid gift cards are just two examples of how consumers have been making use of the prepaid option for many years.

A prepaid card is topped up by the user to make purchases wherever the payment card is accepted, including online and abroad. Money can be paid into the card in a variety of ways, depending on the provider, and allow the user to set clear monthly rates of spending.

However, despite being commonly referred to as prepaid ‘credit cards’ t here is no line of credit available to the user, meaning they run no risk of going into debt – unless a non-authorised payment by a shop or merchant is carried out. The only money available to spend is the cash that has been loaded onto the card by the user and customers have the added benefits of having no interest to pay.

To sum up, prepaid cards provide the same features, security and flexibility of credit cards while avoiding the worries of debt or overspending.

Who are they useful for?

Prepaid card are particularly useful for those:

  • Under the age of 18
  • Who have had past credit difficulties
  • Who have had difficulty getting accepted for a standard credit card or bank account

What can they be used for?

Prepaid cards have a variety of uses, including being used to pay household bills to topping up mobile phone accounts. Other uses include:

  • Paying for groceries and petrol
  • Booking flights
  • Transferring money to friends and family
  • Shopping online
  • Withdrawing cash from an ATM

Eligibility

Customers do not have to be 18 to be eligible for a prepaid card and as they are not a credit facility, no credit check is required. This means customers are guaranteed to be approved for a prepaid card, regardless of their personal credit situation.

But, like most money products, customers are still required to provide details verifying their identity and address. For example, providers will generally require customers to show a passport, driving licence or national identity card, plus a utility bill or an official letter containing a permanent or temporary UK address.

Some of the UK prepaid card issuers are able to give an instant approval as they can verify a customer’s details online – known as an electronic identity check.

Benefits of prepaid cards

There are many benefits of using a prepaid card. These range from making savings on international money transfers to online shopping perks. Other benefits include:

  • Accessibility – No credit checks means customers can get a card without worrying about their credit history.
  • No risk of debt – Users are only able to spend whatever money has been put on their card.
  • Financial planning - Users are sent a full breakdown of spending on the card enabling them to control the spending of employees and children, as well as their own finances.
  • No interest charges, late payment or over limit fees.
  • Internet uses - Prepaid cards are widely accepted across the internet, meaning bargains can be picked up as goods and services are usually much cheaper online. A prepaid card can also be registered for services such as ebay and p aypal – replacing the need to send cash, cheques or postal orders.
  • Travel – Prepaid cards can usually be topped up worldwide, depending on the specific provider, and be used at overseas ATMs. Some providers even offer 0% foreign exchange fees and offer to replace a lost card with a new one.
  • Safety – Users can get their money back on purchases made online or on the phone, while not having to worry about carrying cash.
  • Money Transfer (see below)

Money transfer

Another great benefit of using a prepaid card is that it can be a great cost effective way of carrying out international money transfers.

An additional card can easily be added to the holder’s prepaid account, which may be sent to a family member or friend outside of the UK - re-loaded with cash in the UK - and then used to withdraw funds in the local currency. Although ATM and foreign transaction fees apply, the service is likely to be a quicker and cheaper option than most mainstream money transfer services.

Charges involved

Although there are no interest charges, over limit or late payment fees to be wary of, there are some charges associated with using a prepaid card. It is important for customers to weigh up these possible charges against the benefits (mentioned previously) in order to ensure that applying for a prepaid card is the most suitable option.

The possible charges that customers should look into include:

  • Card application fee
  • Monthly/annual service charge
  • Customer helpline call rates
  • UK and foreign ATM withdrawal fees
  • Purchase/Internet transaction
  • Bank (Post Office supermarket, etc) deposit fee
  • Card replacement fee
  • Card renewal charge
  • Courier/Express delivery charge
  • Account termination fee

Shopping for the right card

Shopping around for the most suitable prepaid card can easily become a difficult process for consumers as many of the prepay products available have a variety of pricing structures and fees.

Remember, the prepaid card market is fast emerging and as a result there are an increasing number of prepaid credit cards being launched in the UK. Some are specifically targeted at teenagers and are available to under 18’s, whilst others offer fully branded prepaid Visa or MasterCard with Chip & PIN facility and high reload limits.

However, there are some factors that customers should consider in order to help them decide which card is most suited to their needs. These include:

  • Card reloading stations – where can the card be topped up, e.g. online, post office, petrol stations, etc.
  • Top-up fees
  • Reload limits
  • Monthly and annual fees
  • Are additional cards free of charge?
  • Can the card be fully managed online?
  • Are there any time and date restrictions on when money cannot be loaded onto the card?
  • Does the card have a Chip & PIN capability?
  • What level of protection is offered by the card company