Moneysupermarket.com cards expert Steve Willey discusses the different ways you can take full advantage of a prepaid card...
Video Transcript
Hello, I'm Steve Willey. I'm the new head of cards for moneysupermarket.com and today I'm going to talk to you about prepaid cards.
There are 4 million people in the UK who don't qualify for a bank account as it stands today; there are also immigrants joining the UK with work and without bank accounts or credit footprints in the UK, so it enables them to load their money on that they've been earning and spend in the normal way.
Students looking to avoid building up debts while their away at university - this is a great way of budgeting and managing your money, or even taking money away for your gap year and using it for spending while you your away.
And, as well as that, prepaid cards are phenomenally successful as a traveller's cheque replacement card, and in which case it's an actually cheaper method than travellers cheques.
You can load money onto the card in various different ways: you can load them over the internet, in convenience stores wherever you see a Payzone or a Paypoint sign; you can load them in banks and also at Post Offices as well.
The great thing about them is that you can only spend what's on the card, so there is no risk of debt, no overdrafts and therefore no fees and interest charges to pay.
Because there's no risk, everyone over 13 is eligible to apply for one. All you need to do is prove you are who you say you are in order for the card to be issued to you.
The simple answer is fees. Unlike a credit card you can't be charged interest, late fees, over limit fees, balance transfer fees, and that's the way the credit card providers make their money. So, principally you can actually tell how much your going to be charged by a pre-paid card because the charges are freely available upfront.
Providers will charge you a range of fees. They will be the initial cost of buying a card; monthly fees; transaction fees every time you use the card; taking money out from ATMs - so you have to be cognizant of all those charges when making a calculation.
What's important is [that] you work out what the card is going to be used for, and then do some calculations using the freely available provider's fees to make your decisions. What's crucial is that you don't just make a decision based on the initial cost of actually purchasing the card. Check if you can look at the account online, and that way you save yourself some pretty hefty call centre charges - many of the prepaid providers charge you premium rate to ring them.
I hope you find this useful, and look forward to speaking to you again.
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