Prepaid
Prepaid cards work a little differently to other types of plastic. Although you can use them to make purchases or withdraw cash in the same way as a debit or credit card, the key difference is that they need to be loaded up with cash in advance – and you can then only spend the balance on the card.
There are a number of benefits to using a prepaid card, so it pays to compare your options carefully and select the right one for your needs
Prepaid cards usually fall into two categories – pay monthly and pay-as-you-go. Pay monthly prepaid cards charge a monthly fee, but in return you pay lower transaction fees than you would with a pay-as-you-go card, and often, you will also be given rewards or cashback on your spending.
Pay monthly prepaid cards are more suited to those who regularly spend on their card, while pay-as-you-go options are more suited to those who only make a handful of transactions on their card each month.
Because you can only spend the money you’ve pre-loaded onto your prepaid card, they are a great choice for those on a budget, for parents who want to keep an eye on their children’s spending, or even for businesses.
But another benefit of prepaid cards is that they don’t require a credit check and, as a result, they are easier to get hold of than credit or debit cards. This means they can be a good option for those with a poor credit score or no credit history at all. Some prepaid cards will also allow you to add a ‘credit builder’ service to your card which will help you to improve your credit rating.
What’s more, certain prepaid cards can even be used as an alternative to a bank account, allowing your salary to be paid onto them.
Prepaid cards can also be a handy addition to your wallet if you’re holidaying abroad. This is because a number of cards allow you to pre-load them with foreign currency and then side-step the expensive fees charged by many debit and credit cards for use overseas.
