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Prepaid cards could suit many different types of consumer

Prepaid cards can be an excellent payment type for all different types of consumer.

More from Prepaid Cards
7 December 2009

The prepaid cards work in much the same way as a traditional credit card, except they must be topped up with funds before they can be used to make purchases. This can be a real advantage for many types of spender as it is only possible to spend as much money as is on the card. In this way, prepaid cards make it impossible to overspend because the card simply will not work if there are insufficient funds available. Since it is impossible to spend more than what you have, there is no risk of running up late payment fees either.

Young people who would like to be able to keep track of their finances could find this aspect of the prepaid cards useful. Parents may also have peace of mind giving these cards to their children, knowing that they have enough money on hand but will not run up huge debts by overspending. Many of the prepaid card accounts allow additional card holders as young as 13.

Some of the card providers also send real time text messages to card holders informing them of their balance to help them stay in control of their finances.

The cards can be used in much the same way as traditional credit cards, in that holders have a pin number unique to their card which they enter when paying for an item and the total amount is taken from the card immediately. As well as in store payments, the cards can also be used online. This could prove very useful for shopping over the festive period without having to traipse through the busy shops.

One of the best cards available on the market is arguably the O2 Cash Manager Prepaid Card, as this can be bought free of charge with no set up cost. The downside is that this card is only available to O2 customers.

For others looking for a good prepaid card, the Freedom PAYG Prepaid MasterCard may be the solution. Although it costs £9.99, there is no service fee on the card. The fee for any transactions is 2.75%, with a minimum of 99p and a maximum charge of £1.50. Load fees vary from location to location. At the Post Office, for example, the charge is 2% with a minimum of 99p, whereas PayPoint charges 3%. Card to card transfers online, however, are free of charge.

Those looking for a card without a transaction fee may want to look at the eclipse Prepaid Pay Monthly MasterCard, which costs £8.95 with a monthly service fee of £4.45.

Prepaid cards can also be a great option for those who would like to be able to make purchases with a MasterCard or Visa card but perhaps lack the credit rating to be accepted for a standard credit card.

Card companies' policies on insurance against fraudulent activity can vary so it could be worth looking into this when applying for one of the cards.

Best Buy Credit Cards

Credit Cards Balance Transfers Purchases APR Representative (Variable)
Tesco ClubCard Purchases Credit Card Logo Tesco Bank Logo Tesco ClubCard Purchases Credit Card Apply
9 months
2.9% fee
18 months
Representative Example: The annual purchase rate is 16.9% p.a (variable) so if you spend £1200 your representative apr will be 16.9% p.a (variable)
Barclaycard Platinum With BT (27 Mths) Logo Barclaycard Logo Barclaycard Platinum With BT (27 Mths) Apply
28 months
3.5% fee
6 months
Representative Example: The annual purchase rate is 18.9% p.a (variable) so if you spend £1200 your representative apr will be 18.9% p.a (variable)
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