Pre-paid cards


What is a prepaid card?

Prepaid cards work much like a pay-as-you-go phone in the sense that you simply top them up as you go. Acting as an alternative to a debit card or credit card, prepaid cards effectively ensure you spend precisely what is in your bank account. All that is required is the pre-loading of the card with money by transferring it from your current account and you are ready to go. Prepaid cards are particularly helpful for those individuals who struggle to control their budgeting. Limiting your spend allowance can also be wonderful for those who wish to make purchases online as they can prove to be a useful alternative to debit or credit cards. 

What are the advantages of a prepaid card?

Teenagers: With a prepaid card you simply can’t spend money that isn’t there which makes them perfect for teenagers or young, independant spenders.

Scamming: If an individual does manage to get hold of your bank details, they can only spend as much money as is in the account; limiting the financial damage. 

Limit: There is generally a limit to how much you can put on a prepaid card which makes them very good for budgeting

Security: Once you report the card as lost or stolen the provider can immediately block the card and provide you with a new one. 

Credit builders: Some prepaid cards work to rebuild your credit history. This is because they charge a monthly fee and if you pay this on time, it can help rebuild your credit rating. 

No Credit Check: There are no credit checks on a prepaid card which means you could get accepted even if you have a bad credit rating. 

Usage abroad: Some cards have lower fees when you use them outside of the UK.

Additional holders: Some prepaid cards allow for more than one cardholder. 

What are the disadvantages of prepaid cards?

Fees: There are fees for using prepaid cards which can easily add up.


Protection: There is far less protection on a prepaid card compared to that of a credit card as you are not protected under Section 75 of the Consumer Act. This means that if a company goes bust or fails to provide you with a promised service, a prepaid card can’t offer you money back. This may make them unsuitable for purchases such as flights. It also isn’t protected under the Financial Services Compensation Scheme if your bank or building society goes bust. 

Inactivity fees: Some prepaid cards will charge you if you don’t use your card for a certain period of time. 

Cancellation fees: Some providers will charge you for transferring funds from your card to the bank or when you close your account. 

Cash withdrawal fees: You will be charged every time you withdraw money from a cash machine.

Load charges: Some cards will charge you for loading cash onto them. 

How can you top up a prepaid card up?

Prepaid cards offer a number of options when it comes to topping up, this includes:

  • The Post Office 
  • A Pay point
  • Over the telephone
  • Online 
  • SMS 
  • Direct debit 


How much do prepaid cards cost?

There is normally a charge for getting a prepaid card, although some cards waive this fee if you load the card with a certain amount of money. Occasionally, providers also run special offers so it’s worth looking out for these. Some may also charge you when you pay for the goods. 


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