Product Description
Prepaid cards are similar to credit cards in that you can use them to buy products or services from a retailer. The main difference however is that the money being used has to be preloaded onto the card and once that runs out, the card doesn’t work i.e. there are no credit facilities with these cards. Prepaid cards can be loaded as often as you like and there are a number of ways to do this. In short they offer a handy alternative to cash without the worry of running up debts.

Main Players
Prepaid cards are quite a new phenomenon in the UK and so the choice of providers is somewhat limited. The top choices to date include Cashplus Gold, Virgin, Payzone MasterCard, Splash, Optimum and Bread. You may only have heard of Virgin however the others are also worth a look. All of the UK prepaid cards are either MasterCard or Maestro and so they can be used widely both on the high street and on the internet.

Pros of Prepaid Cards

• A great alternative to carrying cash, especially when going abroad.
• They also help to repair bad credit as they are generally backed by Visa or MasterCard but there are no credit checks required when applying.
• As they aren’t associated with your bank account you can’t spend more than is actually on the card and there is no worry about running up a debt.

Cons of Prepaid Cards

• The main drawback to this type of payment card is the associated fees. Many issuers charge an application fee and a monthly fee to own the card. You may also be charged to load the card and to withdraw money from a cash machine and occasionally you are also charged a fee when making purchases.
• Some prepaid cards can only be loaded via the internet which can be a problem when away from home and especially when travelling abroad.
• If you forget to reload your card and try to use it to shop it won’t be accepted – and this can be quite embarrassing for you and the retailer.

Things to Consider When Choosing a Provider
A lot of the issuers of prepaid cards offer similar terms and conditions however there are a number of points to check before choosing a provider. Firstly it is important to check the monthly fees as some of the cards cost upwards of £5 per month to own – and that’s without loading it and using it. Additional fees will also apply in most cases and these need to noted as well.

Secondly, you should read the methods available for preloading the card with money. Some cards only allow tops ups via the Internet whereas others accept payments through the Post Office, BACS and bank transfers. Again, the fees for doing this should be noted if you intend to top up on a regular basis.

Lastly, you might want to look for a card that offers Cashback when you purchase items from specific internet retailers. If you are thinking of having a prepaid card just to make internet shopping easier then it might be worth paying a little bit extra in monthly fees to get more back as cashback.

BUYability Summary
Prepaid cards are a great way to build up a good credit score without the worry of going into debt. Most can be loaded in a variety of ways which makes them easy to use, even when abroad. The only downside is their associated fees which can be expensive, especially if you are charged for every top up you perform and every purchase you make. In general though, they’re a handy alternative to credit and debit cards with the added bonus of only letting you spend what you have.