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Prepaid credit cards can be used for shops and services in the same way that usual credit cards are.”

Limit your spending to a budget

One way to keep a tight rein on expenses is to opt for a prepaid credit card. Put money onto the card before spending and you will receive the benefits of a credit card with the peace of mind that you are spending money you actually have.

Who can benefit from a prepaid credit card?

Young people who want the convenience of card payments but need to remain within a budget.

Anyone who wishes to budget using money they already have. Anyone who has been refused credit but still wants the convenience of a credit card. You may find pre-paid cards much easier to get than credit cards.

How can you use this product?

Prepaid credit cards can be used for shops and services in the same way that usual credit cards are. You will have a PIN that is unique to your card. Input this number at the cash desk as normal, and the total amount of your purchases will be taken from the card straight away.

When shopping online, fill in the details of your card as usual and as long as there is enough money on your card the transaction will be completed.

Some fees are associated with the card, such as:

• A £5-£10 cost to buy the card.

• Some have annual or monthly charges.

• Some charge to load the card. Check the small print as there is quite often at least one free option to this.

• There are charges on overseas transactions and on cash withdrawals from an ATM. A few cards also charge on UK transactions so look around for one that doesn’t.

The benefits to the user are:

• There are no credit checks, which means you gain access to a card without worrying about your credit history. However, card providers will check that you are who you say you are.

• No danger of getting into debt as you can only spend what is loaded onto the card.

• You won’t be charged interest.

• There will be no late payment fees.

• You will have the convenience of shopping with a credit card.

Other people can also load money onto this type of credit card. For instance it is popular with parents wishing to help their children and keep them to a budget. It is also possible to have your salary loaded onto the card.

It is also possible to have a secondary cardholder but this often comes with a fee and the primary cardholder is responsible for the account.

Card fraud

If your card is stolen it is essential to inform your provider immediately as they will block your card. The card can’t be used without a PIN and in the event that it is, only the amount loaded on the card can be used. This can be distressing if your salary has just been paid onto the card so shop around to see what the card policy is regarding fraudulent use and if there is any insurance against this.