A prepaid card is a payment card that is pre-loaded with money. Once you've loaded money onto your card you can then use it to shop online, abroad or take cash out of an ATM. Prepaid cards are similar to credit cards in that they look the same, and have the same chip and PIN facilities, but are different in one important aspect: there's no credit, so you don’t need to worry about spending over your budget.
You top up a prepaid card in a similar way to topping up a pay-as-you-go phone. You can usually top them up at Payzones which can be found at over 30,000 locations in the UK, using your mobile, with a debit card or even by having your wages paid directly to the card. Some of the most common benefits to using a prepaid card include:
- They are a great way to shop online if you are worried about identity theft- most prepaid cards aren’t tied to your bank account and so limit your exposure to fraud.
- You are guaranteed acceptance if the provider can verify your identity using your personal details.
- Many cards come with a companion card, meaning you can share money with friends or family anywhere in the world.
- Some cards can be used to rebuild your credit rating by loaning you the annual fee which you pay back in instalments each month. At the end of the year your repayments are reported to Experian, helping to improve your credit rating.
- If you’re planning a trip then a prepaid card is safer than carrying cash, and you can avoid foreign exchange rate fees if you buy your card in Euros or Dollars.
You can view more information about prepaid cards in our article; Prepaid Cards: the safe way to take money abroad.