As the credit crunch worsens and recession sets in, the popularity of prepaid cards continues to rise with good reason. Prepaid credit cards have many benefits which include
- Easily Available – There are no credit checks and no bank account is required to get a prepaid card which means you can get a card even if you have a poor credit history or CCJ’s as long as you can confirm your identity and address.
- Stay in control and no debt risk – With a prepaid card, there is no risk of debt or overspending as there is no overdraft facility on a prepaid card and hence, they are an ideal way to budget for yourself or help to manage your children’s spending.
- Excellent for Travel – Many providers offer dollar and Euro prepaid cards and an exchange rate which is much better that that typically available from high street bureau de change and FX providers. Add to that the convenience of being able to top-up your card online or at various other top up locations.
- Global Acceptance – Being Mastercard, Visa or Maestro branded, you can shop anywhere in the world where these scheme brands are accepted – on the Internet, over the phone and on the high street.
How to save on prepaid card fees?
Given all the wonderful benefits of prepaid cards, it seems quite surprising that prepaid cards have not been more widely adopted and that is probably down to the fact that most prepaid cards do have some fees attached to them. However, there are numerous ways to save on these fees to make prepaid cards an even more attractive proposition for you.
Tips to save fees on prepaid card application and usage
- Application Fees – Choose your prepaid card carefully. Typically card applications cost between £4.45 – £9.95 but there are a number of cards which are available free of charge if you top them up with a minimum amount at the outset.
- Application Mechanism – You can apply for prepaid cards online, instore or via SMS using your phone. SMS whilst convenient is usually chargeable and you could save up to £2.50 on SMS application costs by using other application mechanisms.
- Activation Fees – Choose a prepaid card in which the activation fee is included within the application fee. Also, most card providers allow you to activate cards online or via telephone. Avoid premium telephone numbers and stick to online activation where possible.
- Top-up or Loading Fees – Loading a Prepaid card with funds is usually free from most providers as they are keen for you to load your card. Look at the different top up mechanisms that your prepaid card issuer provides and choose the method that costs you nothing or next to nothing.
- Point of Sale Fees – Prepaid card providers typically charge a fee for using your prepaid card at point of sale and this can vary from a few pence to up to around 2.95% of your transaction value. However, there are a number of providers who provide free usage at POS and hence, if you think you will be using your card mostly at POS, get a card with zero POS fees.
- ATM Fees – The majority of card fees are likely to come from making ATM withdrawals and these tend to be pretty steep. Where possible avoid withdrawing money at ATM’s with your prepaid card but if you reckon that this is the main use and you are likely to make numerous withdrawals, choose a card which has low withdrawal fees. There are a few providers who allow a couple of free ATM withdrawals and then charge a small fee for subsequent withdrawals.
- Pay Monthly or Pay as you go Tariffs – Some cards providers give you the option of choosing a Pay monthly or a Pay As You Go tariff. Based on that tariff, you can save on POS fees, ATM withdrawals and top ups. Choose a tariff that suits you best.
- Card currency – For travel cards where usage abroad is the main criteria, choose a card currency which is local to your travel destination. Euro and Dollar are two most popular options available for travellers travelling abroad outside the UK which means that you pay no FX rate when using your Euro card where Euro’s are accepted or your dollar card where USD is the acceptable transaction currency. You are already getting a better deal as the FX rate on the card is better than what you would get from high street foreign currency providers.
Find the right prepaid card for you
Visit out consumer prepaid card comparison section to find the best prepaid card to suit your needs. If you wish to use a prepaid card for your business, visit our business prepaid card section.