7 facts about the prepaid debit card

By UK CreditCards.com

Prepaid debit cards are a popular option with security-minded consumers. They offer the convenience of loading money onto a card, which you can then spend on goods or services or withdraw as cash. A prepaid debit card is a secure, convenient and easy way to manage your money -- and is a particularly good option for consumers who are wary of using credit.

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Here are seven more things you may not know about these useful cards.

1. You can use your prepaid debit card online.
The vast majority of prepaid debit cards allow you to use your card to purchase goods or services online. They offer the same security as a traditional credit card or debit card, and they make it easy for you to buy on the internet.

2. You won't pay any interest.
One of the main advantages of prepaid debit cards is that you don't pay any interest charges. This is because the account is always in credit, as you are only allowed to spend or withdraw the money you have already loaded onto your card.

You may also find that you won't have to pay any fees for your prepaid card. Free prepaid cards are becoming more common, and so make sure you look out for cards that don't charge an annual or setting up fee when you compare deals.

3. They are a good choice if you have adverse credit.
As there is no overdraft facility or borrowing on a prepaid debit card, many banks don't undertake a credit check before agreeing a card for you. Prepaid cards for bad credit are therefore widely available.

If you have a less than perfect credit history, a prepaid debit card can be the perfect way to take advantage of all the security and convenience of a credit or debit card without having to go through a credit scoring process.

4. You can withdraw cash at an ATM in the UK or overseas.
One of the benefits of a prepaid debit card is that you can use it to withdraw cash from an ATM. Rather than carrying large sums of cash on your person, you can top up your card and withdraw cash when you need it. 

This is particularly useful if you are heading abroad on holiday. Instead of taking a large amount of foreign currency or traveller's cheques, you can simply load your spending money onto your prepaid debit card before you depart. You can then withdraw cash or pay for goods and services using your card whilst you are abroad.

5. It isn't possible to go overdrawn.
A prepaid debit card has no overdraft facility as you can only spend the cash you have loaded onto your card. Consequently, you'll never pay expensive overdraft fees or spend more money than you have immediately available.

6. There are loads of ways to top it up.
There are lots of ways that you can add cash to your prepaid debit card. You can do it by a transfer from another bank account or you can pay cash over the counter at many banks and building societies.

You can also have your salary credited directly to your prepaid card account.

7. You can manage it online.
Most cards (including prepaid cards for bad credit) allow you to manage your account online. You can access your prepaid debit card details using the internet and check your balance and recent transactions.

Many online services also allow you to top up your card at the click of a mouse.

See related:Online shopping: More secure with prepaid cards?; How to avoid overdraft fees

Published: 9 June 2011