Editor’s pick: Five user-friendly prepaid cards

By Emma Lunn

For many consumers, prepaid cards are way to harness the convenience of plastic without facing the risk of debt and interest charges.

When travelling abroad, prepaid cards remove the need to carry large amounts of cash or travellers' cheques. They let those without bank accounts or credit cards make online transactions and cash withdrawals. And, because cardholders can spend only up to the amount loaded onto the card, prepaid cards can be a good way to control spending.prepaid-cards

"A big part of budgeting effectively is being disciplined in what you spend," says Paul Crayston of the Money Advice Trust. "A prepaid card can be a useful tool for this, enabling people to get the benefits of paying with plastic without having the risk of over-extending and ending up in debt."

Yet prepaid cards come with costs of their own - including some steep fees.

"With prepaid cards generally one of the main considerations are the charges," says David Black, banking specialist at financial research firm Defaqto. "These vary considerably, and charges can be levied for topping up or loading cards, weekly, monthly, or annual service fees, checking balances and inactivity or dormancy fees."

UK.CreditCards.com took a look at the prepaid cards on the market and picked five that have user-friendly terms, flexible options and manageable fees. For a quick overview of the costs, check out our Prepaid cards and their fees table below.

FairFX Prepaid MasterCards
Marketed to travellers, FairFX's prepaid cards provide several currency options - the Euro card (loaded with Euros), the US Dollar card (loaded with dollars) and the Anywhere Card, which can be loaded with pounds sterling (funds are then converted to the local currency at the point of sale).

Fees and charges depend on which card you apply for. All three cards have a £9.95 issue fee and charge £6 per card for extra cards on the same account (for family members, for example). You'll also be charged £0.80 per minute if you call the customer service line.

The Euro and Dollar card don't incur a point-of-sale transaction fee when used in the UK or abroad, but the Anywhere card will charge 1.4% of the transaction amount.

If you use your card to withdraw cash from an ATM, you'll be charged €1.50 for the Euro card, $2 for the US dollar card and £1.50 (£1 abroad) for the Anywhere card.

Reloading a FairFX card is free if you do so by bank transfer or debit card, but it will incur a 2.5% charge if you use a credit card. All three cards also charge a 1.4% fee if they're used "out of card currency," for example if you use a U.S. dollar card in Europe or Euro card in the U.S.

The minimum for a single load as well as the maximum balance vary by card.

Cashplus MasterCard
There are four types of Cashplus cards: Activeplus, Flexiplus, Cashplus Advantage and Cashplus Payroll. Activeplus has a £4.95 monthly fee, Flexiplus is free, and Advantage and Payroll are free, provided you load the card with £1,000 a month -- otherwise there is a £4.95 fee.

With the Activeplus card, purchase transactions in pounds and top-ups are free, while the Flexiplus card charges £0.99 for UK purchase transactions, electronic payments and top-ups. The Advantage or Payroll card charges only for electronic payments (£0.99).

All the cards charge £2 for UK ATM withdrawals and £3 abroad. If you don't use a Cashplus card for 120 days, you'll be billed an inactivity fee of up to £4.95 per month. Using any of the cards abroad will cost you 2.99% of the purchase/transaction amount.

Cashplus customers can also add a feature called "Credit Builder" to their accounts. Doing so, Cashplus claims, will allow them to use their cards to improve their credit ratings. Cashplus gives the cardholder a loan that's equal to a year's worth of monthly card fees. If the cardholder pays back that loan with regular, on-time monthly payments, the paid-off loan gets reported to the credit agencies.

Virgin Money Prepaid Card
Virgin Money offers two options for its prepaid card: "pay-as-you-go" and "pay monthly." With the pay-as-you-go option, cardholders pay no monthly fee, but must pay a 2.95% transaction fee with every swipe. With the pay-monthly option, cardholders pay a £4.95 monthly fee, but no transaction fees.

Both cards cost £9.95 to set up and are free to top up by bank transfer, debit card or at the Post Office. Loading the cards by credit card costs 2.5% of the amount loaded (and 2.75% by PayPoint).

Using an ATM costs £1.50 in the UK or abroad if using the pay-monthly option. With the pay-as-you-go option, those withdrawals will cost 3.5% of the amount withdrawn.

Cardholders can have a maximum of £3,500 on the Virgin Money card at any time, and the initial load cannot exceed £600. The daily ATM withdrawal limit is £250.

Freedom Prepaid MasterCard
Similar to the Virgin Money card, the Freedom card has "pay-as-you-go" and "unlimited" options.

The unlimited option is £6.95 a month, but then it's free to load the card at a bank or Post Office, withdraw cash in the UK and make in-store or online purchases in the UK. Overseas cash withdrawals are £1.50, and there is also a 2.75% foreign transaction charge.

The pay-as-you-go option charges £1 for bank loads, 3% to load the card via PayPoint and 2% to load at the Post Office. Cash withdrawals are 1.5% of the withdrawn amount in the UK (minimum £1 and maximum £1.5), and overseas ATM withdrawal fees are £2.50. Online or in-store purchases in the UK cost £0.50, and there is a 2.75% foreign exchange fee.

Clearcash Prepaid MasterCard
Clearcash markets itself as a replacement for bank accounts. It also offers online bill pay and budgeting features that it claims will help cardholders better manage their money.

Clearcash also has "pay-as-you-go" and "pay monthly" options. Whichever option you choose, the card will have a £4.50 issue fee and allow a maximum balance of £5,000 at any time.

The pay-monthly option costs £9.99 per month, but purchase transactions are free. ATM withdrawals are £0.50 in the UK and £1.50 abroad. There is also a foreign exchange fee of 2.75% on all overseas transactions.

The pay-as-you-go options doesn't have a monthly fee, but transactions cost 2.5% of the transaction amount. UK ATM withdrawals cost £0.75, and overseas ATM withdrawals are £1.50.

For both options, reloading costs 3% of the loaded amount via PayPoint  but is free at the Post Office and via BACS or automatic wage transfer. You can also load the card via cheque -- fees vary from £4.50 to £35 depending on the cheque amount.

So which card is best for you -- and how much will it cost you? Use our table to check the fees of all cards mentioned in this article. Terms, conditions and fees are subject to change -- check with the issuer for the most current information.

Credit card            
Issue fee                 
Monthly fee            
Transaction fee Reload fee
ATM fee
Fairfax Prepaid MasterCards
Fairfax Anywhere
£9.95 None 1.4% (UK);
0% (abroad)
2.5% via credit card, otherwise free £1.50 (UK);
£1 (abroad)
Fairfax US Dollar £9.95 None None 2.5% via credit card, otherwise free $2 (UK and abroad)
Fairfax Euro £9.95 None None 2.5% via credit card, otherwise free €1.50 (UK and abroad)
Cashplus MasterCard
Activeplus £9.95 £4.95  None None
Up to £2 (UK);
£3 (abroad)
Flexiplus £9.95 None Up to £0.99 (UK); 2.99% (abroad)
Up to £0.99  Up to £2 (UK);
£3 (abroad)
Cashplus Advantage
£9.95 None if £1,000 loaded. Otherwise, £4.95 None (UK); 2.99% (abroad) None Up to £2 (UK);
£3 (abroad)
Cashplus Payroll £9.95 None if £1,000 loaded. Otherwise, £4.95 None (UK); 2.99% (abroad) None Up to £2 (UK);
£3 (abroad)
Virgin Money Prepaid Card
 Pay as you go
£9.95  None 2.95% (UK); 3.5% abroad
2.5% by credit card; 2.77 by PayPoint;
otherwise free
2.95% (UK); 3.5%(abroad)
 Pay monthly
£9.95  £4.75 None (UK); 2.95% abroad
2.5% by credit card; 2.77 by PayPoint;
otherwise free
£1.50 (UK and abroad)
Virgin Money Prepaid Card
 Pay as you go
£5.99 None £0.50 (UK and abroad) 3% by PayPoint;
2% by Post Office;
£1 by bank load
1.5%, up to £1.50 (UK);
£2.50 (abroad)
 Unlimited £5.99  £6.95 None 3% by PayPoint, otherwise free None (UK);
£1.50 (abroad)
Clearcash Prepaid MasterCard
 Pay as you go
£4.50 None 2.5% (UK);
2.75% (abroad)
3% by PayPoint;
£4.50 to £35 by cheque;
Otherwise free
£0.75 (UK);
£1.50 (abroad)
 Pay monthly £4.50 £9.99 None (UK);
2.75% (abroad)
 3% by PayPoint;
£4.50 to £35 by cheque;
Otherwise free
£0.50 (UK);
£1.50 (abroad)

Source: UK.CreditCards.com survey of leading card issuers. Terms and conditions are subject to change by issuer. Data current as of May 7, 2012.

See related: Editor's pick: Travel rewards cards with no annual fee, 6 questions to ask when comparing prepaid gift cards

Published: 7 May 2012