Prepaid credit cards are far from a new idea – the principle has been around for many years with such items as prepaid electric meter cards etc all working on the same principle.

In essence what a prepaid credit card offers is the facility to make purchases and payments through the Visa or Mastercard system, in the same way as someone using a “normal” credit card would – this is the same for purchases both in stores, shops, restaurants etc. as well as with online shopping on the internet.

They have a number of benefits over and above a “normal” credit card and these features and benefits will be considered below: –

Available to Almost Anyone

One of the downsides of a normal credit card is the need for the applicant to pass a credit check with a Credit Reference Agency – if you’ve got or have had a history of arrears, CCJ’s or Bankruptcy then obtaining credit can be very difficult if not impossible. Applying for a prepaid credit card normally does not require a “credit check” as the applicant is not actually applying for credit.

Top up direct or through outlets

Money can be added to your card either through a standing order from your bank account on a monthly basis, or through cash deposits at any number of retail outlets, including Post Offices. Check where it is possible to top-up your card before completing an application.

Help with Budgeting

By depositing a fixed monthly sum onto your card you are effectively limiting the amount of money available to spend through that card – remember, you are not borrowing any money from the card issuer. Say for example you are trying to reduce expenditure in one particular area – set a monthly budget for that area of expense and set this as your regular top-up – once the money has gone you will have reached your target for that month.

Different Types Available

It is possible to choose from several different types of card – you may have a personal preference between Mastercard, Visa or Maestro. These days the differences between Mastercard and Visa are fairly small – Mastercard tends to be more widely accepted in America with Visa more popular in Europe – both cards are normally accepted at most outlets.

Increased Security

Carrying a pre-paid credit card is a good idea in our opinion, preferable to carrying lots of cash. In the event of loss or theft simply report this to the card issuer as soon as possible and they should be able to cancel/block the card to limit the amount of money which you could lose through someone else using the prepaid card.

Ideal for Travelling

One idea which might be of interest to you is the use of a prepaid card whilst travelling or on holiday, either in the UK or abroad. No matter where you go in the world the card could be topped up by a friend or relative based here in the UK. A cheap alternative to other forms of transferring funds abroad – simply ask your prepaid card provider to issue a second card on your account and pass it to a friend or relative who can then use that card to top up cash here in the UK.

The great thing about this idea is that if you deposit money to the card here in the UK through certain outlets then the funds are credited to your card almost instantly! Check with each provider before applying for a prepaid card that they offer this second card facility and that they allow instant top ups through selected retail outlets.

Ideal for Shopping Online

A prepaid card can normally pay for itself in no time – especially if you are keen on online shopping – it’s common to be able to make great savings online through shopping around different retailers. Often though people are concerned about security with online shopping – particularly with “phishing” and other scams being carried out. With a pre-paid credit card though the amount of money at risk is limited to the amount of cash that has been credited to the card.

Ideal for Business Use

Many companies need to issue their staff and employees with credit cards. With a prepaid card it is simple to limit the amount of funds available for use by each employee – a different amount could be credited to each credit user on a monthly basis making budgeting more straightforward for the company.

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