Introducing Prepaid Cards


What is a Prepaid Payment Card?

A Prepaid Payment Card is like a pay-as-you-go debit or credit card. You “load” money onto your card in advance, and then it can be used just like a credit card for purchases in shops, online, or withdrawals at cash ATMs.

Visa and MasterCard are the most common providers of Prepaid cards, and are widely accepted throughout the world. Money can be loaded onto the card by cash deposit at the bank or the Post Office, bank transfer, at Payzone or PayPoint terminals, or by credit card.

How do they work?

Using the card is no different from any other payment card, and usually requires a PIN code or sometimes a signature to authorise the transaction. At that point the money is immediately debited from the card, and if you have insufficient funds the transaction will be refused. This makes the cards very useful for budgeting, as you won't be able to overspend.

Who are they for?

Prepaid cards are not particularly common in the UK, and are more popular in the USA. There are no credit checks required to acquire one, and so they are especially useful for those who want to make payments via card but due to poor credit history or another reason are unable to apply for a credit card or open a current account that has a debit card.

They are also commonly used by travellers and holiday-makers as a secure alternative to carrying lots of cash. You can get cards for foreign currencies, a good way of saving money by avoiding currency exchange fees levied by your bank. A card belonging to a youth on a gap year can be loaded by his or her parents back home.

What fees do I have to pay?

Card providers may charge a fee for cash withdrawals. This is sometimes a percentage of the withdrawal amount, and sometimes a flat fee per withdrawal, and which is cheaper will depend on how regularly and what amounts you withdraw.

You may be charged to buy the card initially, or to replace it if it is lost or stolen. There can also be loading fees, charging you to top the card up with more money. Different providers and different cards have different terms so check before you make your decision. Also be aware that unlike most current accounts, you will not earn interest on any money loaded onto your card.

If your card is stolen

The card can't be used without the PIN code or signature. However, if the card is lost or stolen you should call the issuer and have it blocked immediately. While some providers will replace money used or withdrawn by a thief, many will not, so be warned and check the terms of your agreement.

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