Guide to Prepaid cards - 1/6
The concept of the prepaid card is likely to be the next big thing in the UK after taking the USA by storm. Described as a ‘credit card without debt’ it seems almost too good to be true. But what can we really expect as the prepaid debit card begins to invade the UK? Can it really be as simple as a prepaid phone or gift card?
In this exclusive guide, moneysupermarket.com will answer those questions explaining the idea behind the scheme, its benefits and its disadvantages. So read on to make sure you play your cards right.
If you would like to skip directly to another part of this guide, click on one of the links below:
Prepaid card uses and benefits
Prepaid cards for teenagers & children
Prepaid card fees and charges
UK prepaid card companies
Choosing the best prepaid card
What is a prepaid debit card?
The prepaid card is far from a new idea. How many of us have used a prepaid phone card, a prepaid gift card or a prepaid sim card? The concept is basically the same. You load money on to a card that can then be used at retailers and online merchants. It can even be used to pay your bills and top up your mobile phone, and you can withdraw cash with the prepaid Visa or MasterCard at an ATM.
Money can be loaded on to your prepaid card by cash, bank transfer or even another credit card, and because it is a Visa or MasterCard you can use it anywhere in the world.
Prepaid cards generally have the same uses as a credit card, so much so that they are commonly referred to as ‘prepaid credit cards’. However, there is a difference. A prepaid card is completely powered by your cash and therefore the money you have in your prepaid account is the money you have to spend. This means there is no risk of running into debt. There are no credit checks and no interest to pay. Consequently, rather than referring to it as a prepaid credit card, a better description would be a prepaid debit card, a prepaid Visa card or a prepaid MasterCard.
In part two we’ll examine the advantages of the concept and the reasons why prepaid cards are taking off.
Why not compare prepaid cards now or compare over 300 UK credit cards.
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