What is a prepaid card?

Key takeaways

• Prepaid cards offer a convenient and flexible way to manage your finances

• You can top up your card using various methods (online, bank transfers, cash deposits, employer payments)

• Prepaid cards are not covered by the FSCS (Financial Services Compensation Scheme)

What is a prepaid card?

Prepaid cards, sometimes called everyday cards, work like a pay-as-you-go option for your spending.

Unlike debit or credit cards, they’re not linked to a bank account or overdraft - instead, you load money onto the card and use it for purchases or ATM withdrawals until the balance runs out.

They can help with budgeting, and they’re accessible to those with no or poor credit history - you can have more than one card with different limits if needed.

It’s expected that the UK’s prepaid card and digital wallet market will grow by 10.3% in 2025.

How do prepaid cards work?

Prepaid cards are straightforward and easy to use - here’s how they work:

• Load money: First you’ll need to add funds when you buy the card - you’ll then be able to top it up whenever you need.

• Spend wisely: Use it in-store, online, or at ATMs, up to the amount you’ve loaded.

Because there’s no overdraft facility, you can’t spend more than you have - making it easier to manage your finances and avoid debt.

How do I top up a prepaid card?

You can load money onto your prepaid card in several ways:

• Online via the provider’s website or app

• Bank transfer using the account details provided

• Cash deposits at banks, post offices, or PayPoint locations

• Direct payments from your employer

• Transfers from someone else, such as a family member topping up for you

Some cards may charge fees for certain top-up methods or ATM withdrawals, so check before applying.

What are the pros and cons of prepaid cards

It’s good to understand the advantages and disadvantages of using prepaid cards before you take one out.

Choosing the right prepaid card

With so many types of prepaid card available, the best choice depends on how you plan to use the card – for everyday spending, travel, or rebuilding credit.

MoneySuperMarket can help you compare prepaid cards side by side to find the one that fits your needs.

Are prepaid cards safe?

Prepaid cards are regulated by the Financial Conduct Authority (FCA), and providers must be licensed as authorised E-Money institutions. This means your money is held securely.

However, they aren’t protected by the FSCS. To minimise your risk, avoid loading more than you need - treat it as a convenient spending tool rather than long-term storage.

Do prepaid cards work abroad?

Prepaid travel cards (or prepaid currency cards) are ideal for holidays - you load your card with foreign currency, such as euros, US dollars or pounds, at a locked-in exchange rate.

You’ll then be able to spend safely abroad, and you can block the card if it’s lost or stolen.

These can be useful for children learning to manage money while travelling

Can a prepaid card improve my credit score?

While prepaid cards are designed to avoid letting you run up debt, there are a few which are designed to rebuild your credit history.

These charge a small monthly fee and report your payments to credit reference agencies, improving your rating if you pay on time.

Can I get a prepaid card with bad credit?

Yes. Prepaid cards don’t involve borrowing money, so providers don’t run credit checks. This makes them accessible even if you have poor or no credit history.