Compare the best prepaid credit cards in the UK
Prepaid credit cards offer a unique way of managing your money. They let users benefit from certain perks that many people think are restricted to credit card users. At the same time, they allow users to manage their finances in a way that ensures that they do not have to deal with issues associated with debt.
Prepaid credit card – How does it work?
A prepaid credit card allows you to pre-load a card with funds. The amount that you choose to put on the card is how much you are willing to budget for because there is no overdraft facility available.
You can use your card for purchases like a normal credit card or cash withdrawals from an ATM until the balance reaches zero. Once you have used all the money that you prepaid, you can ‘reload’ the card to continue using it.
A typical example is getting a prepaid card for your holiday. An individual can load £500 on to a prepaid card and they have chosen this amount because this is the maximum they are willing to spend on holiday for food, drink and entertainment during their trip. The card allows them to set a budget that they cannot go over and there is the plus that if the card is stolen, they can only lose what has been prepaid on that card and nothing more.
Who are prepaid cards designed for?
Prepaid cards are common for those looking to budget. With no overdraft available, you are not tempted to spend beyond your means and go into debt. This type of card provides a strict limit to what you can spend which is why it is good for people who can’t keep track of their finances. You also receive the same perks that other credit cards offer such as cash back and nectar points.
A prepaid credit card is suitable for people with bad credit since it can be difficult to get a regular credit card if you have very poor credit, a County Court Judgement (CCJ) or have ever been bankrupt. This allows someone with bad credit to manage their money better by limiting what they can spend and having the chance to use a normal credit card for when they want to buy things online or on the go. Card providers will also be able to see how well you are using your prepaid card and this may improve your trust with the company and better your credit rating. Therefore, using a prepaid card successfully may allow someone to improve their credit score and obtain better credit card products and rates in the future.
Prepaid cards for young people are very common too as parents want their children to have access to a credit card for emergencies but feel they might take advantage. In this situation, a prepaid card can be a good way of ‘easing’ your children into the world of credit. Moreover, many parents open cards for their children for when they go on school trips. If your child runs out of cash and they need to use money in an emergency then they will be able to use a prepaid card.
Holidaymakers use pre-loaded cards to eliminate the risks associated with carrying large amounts of cash such as theft and overspending. Additionally, if your prepaid card is stolen then you can only lose the amount preloaded onto the account, as your card won’t work when the balance reaches zero. However, you should contact your card provider as soon as possible to minimise your losses.
The different types of prepaid cards include:
Prepaid Debit Cards
Prepaid debit cards are the simplest form – you simply pre-load cash onto the card and then you can use the card in different retailers. Our partners allow you to manage the card online so it is very easy to keep track of your finances.
Prepaid Travel Cards and Prepaid Current Cards
Prepaid travel cards or prepaid currency cards are designed for those who want to use their card on holiday. You usually preload money in your home currency and then spend money in other currencies. It is worth checking whether you will be charged a foreign transaction fee for this service. You can use a fixed currency exchange rate to avoid exchange rate fluctuations.
Card providers such as Caxton and Ukash offer are specific travel cards as there is no transaction fee for using abroad and no fees for withdrawing money from ATMs overseas.
Prepaid Gift Cards
Prepaid gift cards are similar to prepaid debit cards but they are usually given as a gift from one person to another and can only be used at specific stores. These cards are often given as gifts on birthdays, weddings and other occasions and they are an alternative to cash presents. Some companies will give you this type of card as a thank you for signing up or as an added incentive to purchase their product. For instance, signing up for a credit card with Mastercard will give you a free prepaid gift card of up to £50 that you can use at a variety of stores.
Prepaid Business Cards
Many businesses wish to give their employees a card to use for business expenses such as travel, food and accommodation but they do not wish to give the employee access to a credit facility. Prepaid business cards offer a solution in this situation as employees can only use the preloaded amount on the card and it is a good way for the company to monitor spending.
Prepaid Fuel Cards
Furthermore, companies and individuals can preload a card specifically for buying fuel. Advantages include being able to purchase fuel at a price that is fixed so you don’t have to worry about price fluctuations and you can top-up the card online using a debit or credit card. Some companies like to give their staff a fuel allowance each month and prepaid card is good for managing that.
How can Quiddi Compare help me compare online prepaid credit cards?
At Quiddi Compare, we recognise that different prepaid cards are more suitable for different groups of people. Our dedicated team are constantly looking for the best prepaid cards in the UK suitable for teenagers, those going abroad and those with poor credit rating. By presenting the top prepaid cards deals in a simple comparison table, we make it quick and easy for you to find the right product for you. The card providers allow you to apply online. Simply compare the different options available and click on the card of your choice. You will be taken directly to their website where you can apply. We will not ask you to fill in any details or pass on your information to any third parties. Our service is completely free to use and always will be.
How the fees work
All the examples we feature above have different fees. In order to find the best option for you it is important that you look at the different fees when you compare prepaid cards.
The fees for prepaid cards include:
Application fees: a one off charge for opening the account. This is usually between £0 and £50.
- Monthly fees: some cards charge you monthly for using your prepaid card. This can be £0 to £10 a month.
- Top up fee: some card providers charge to reload the card. For some, it may be free of charge but various outlets such as post offices and petrol garages may charge up to 4% of the amount you reload.
- Renewal fees: since prepaid cards expire after a period of time (usually three years), you may have to pay a small fee for reopening the card after the card expires.
- Transaction and ATM fees: you may be charged a very small transaction fee (a few pounds) when you purchase goods or when you withdraw cash from an ATM. There are specific cards that do not charge fees with withdrawing abroad which are ideal for travel.
- Inactivity Fees: the card provider may charge you if you do not use your card for a certain period of time, usually three months.