Guide to Prepaid cards - 5/5
Frequently Asked Questions
What is a prepaid card?
It's a payment card that works like a credit/debit card, except you cannot run up a debt - you can only spend the money you've already loaded on to it and it is not linked to a bank account.
Why would I need one?
Many reasons: You may have a poor credit history and/or be unable to get a bank account. If so, you will be able to get a prepaid card because there are no credit checks.
How can I shop with it?
It can be used like any credit/debit card in shops, online, on the phone or using mail order. Many of the cards are backed by the major card schemes (MasterCard/Visa/Maestro) and accepted by most retailers.
Can I use it to withdraw money from a cash machine?
Yes, in most cases. Your card will have a PIN number and you can only withdraw funds already loaded on to it.
Will it work abroad?
Yes. If it is backed by a major brand - MasterCard or Visa, for example - it will be accepted by millions of retailers and banks worldwide.
Where can I load money on to the card?
This varies from card to card but normally you can transfer funds from a bank account, either at a bank branch or online, or load cash on to the card at post offices and PayPoint. Your card provider will give you details.
Can other people load money on to my card?
Yes, if they have your name, card number and bank details. This is why the cards are so useful for parents wanting to keep their children afloat financially. Even your employer can load your card - you can have your wages paid directly on to the card instead of into a bank account.
Can I make regular, monthly payments from the card?
With some cards, yes. Check the terms and conditions of any card that interests you.
Can I get additional cards for the same account?
Yes, for a fee. You, as the primary cardholder, will be responsible for all charges run up on the account.
Will I get any interest on the money in my account?
No. Prepaid card accounts do not pay interest.
How safe are they from fraud or theft?
Very. The card can be blocked or cancelled once the theft is reported, which you must do as soon as you discover it. The card cannot in any case be used without your PIN number and signature even then a thief could only take what is loaded on the card . . . they could never run up a huge debt. Some card providers, though not all, will refund money taken from your card in the unlikely event that criminals do manage to use it.
What's the minimum age for applying?
It varies - some cards have no minimum age, others are only for 18s and over, check the terms and conditions of the card before deciding to apply.
Can I have more than one card?
Yes. You can have as many as you like. But bear in mind you will pays fees on all of them, which could add up to a substantial outgoing.
What are the downsides?
There are very few downsides other than the fees. The only key thing to do is keeping a regular check on your account to avoid the embarrassment of your card being rejected by a retailer. Remember, once your money has run out the card will no longer work.
Where can I get one?
At moneysupermarket.com we provide a unique price comparison tool, which gives you the chance to compare prepaid cards, their fees (including withdrawal fees and monthly fees) and their additional benefits such as their reload options and whether you can manage your account online.
Click here to compare all prepaid cards
Further information:
How the payment card transaction process works
MasterCard Prepaid
Visa Prepaid
What is a prepaid card and how does it work?
Prepaid card uses and benefits
Prepaid card fees and charges
Which card is right for you?
This was last updated in February 2008.