Why should I get a prepaid card?
You only need to spend what you top up, so it’s up to you! You usually don’t incur any fees for leaving money on your card, so you can use it as and when you choose.
No credit checks
If you’ve got bad credit or have defaulted on loans previously, it’s unlikely you’ll be able to get normal credit cards. Prepaid cards offer respite from the spiralling debt that can come with credit. Some prepaid cards charge monthly fees, while allowing you to build your credit.
With a notice-savings account, you’ll have to notify the account provider before you make a withdrawal. This is good for those who can afford to wait, paying better rates on the whole than easy-access accounts. It’s worth being aware of how much you’ll pay in penalty fees if you withdraw without notifying the provider though!
A lot of prepaid cards work abroad. This is great for a two main reasons. Firstly you won’t have to carry loads of cash around or worry about it being stolen. Secondly, prepaid cards often offer bank beating transaction and withdrawal fees, so you won’t need to worry about racking up a big bill on ATM charges.
Easy to keep track of spending
A lot of prepaid debit cards come with an accompanying app which will allow you to track your spending. Neatly designed apps let you see how you’re spending your money too, so you can get an idea of where you need to reign in your spending!
How do prepaid cards work?
When you buy a prepaid card you can decide how much money to put on it straight away. There’s usually a few limitations (such as an overall maximum, and a maximum amount you can withdraw in one go). Just think of a prepaid card as a card for day-to-day spending, the same as having cash in your wallet.
Topping up works in a number of ways. A lot of cards allow you to top up at places such as the Post Office, so you can go in and simply add however much cash to your card. (This may take a few days to be processed).
All prepaid cards are linked to your main bank account or building society. Many prepaid cards let you top up online or via an app. The Monzo card for instance allows you to manage your account, the cards linked to it, and other features such as you PIN number and your spending history all from the app.
Do prepaid cards cost much?
Fees and charges varies. Some prepaid cards come with absolutely zero fees for setting up or having them open.
In other cases, you can be charged for getting the card in the first place. Some cards also have monthly management fees. Similarly some charge withdrawals. Some charge you for paying for goods.
These fees can quickly add up so make sure you shop around and find the right card for you.