What is a prepaid debit card?
A prepaid debit card lets you load funds and then use it like any other debit card. It’s safer than carrying cash around with you. The benefits include using it to pay for shopping and bills online or for getting cash from an ATM (also known as a cash machine). Also, you can only spend the money you have loaded so like a pay-as-you-go phone, you can only use the funds that are in the account. It’s ideal if you want to control the amount you spend and do not want to risk going overdrawn and incurring expensive charges. In the UK prepaid debit cards are now widely accepted however they can give you more than just a basic bank account.
How does a prepaid card work?
A prepaid debit cards works like a bank account in as much as you can put money in via a number of options, either transfer money onto your card from another bank account, or have wages and other income paid in directly if your card comes with a sort code and account number (this can vary from provider to provider).
In general, prepaid debit cards can be used at ATMs, online or at shops / restaurants, those partnered with a company like Visa is widely accepted. You can use the card anywhere you see the payment acceptance logo.
Is a prepaid debit card better than carrying cash?
A prepaid debit card that comes with a secure PIN and CHIP with the back up of a lost and stolen helpline may be more secure than carrying cash around with you. However, bear in mind there may be charges associated with replacing lost and stolen cards.
Can I use a prepaid debit card abroad as well as the UK?
Yes, however this may vary from provider to provider. Some providers allow you to use the card abroad but there may be different transaction fees and a % charge of the amount you access. A prepaid debit card can be used in Europe and worldwide. Your money is more secure on a PIN and CHIP prepaid debit card than cash in your wallet and purse which can be lost and stolen and you are less likely to get your money back.
Is a prepaid debit card better than a basic bank account?
A prepaid debit card is an alternative to a bank account. They are two different products.
What to look out for when choosing a prepaid card?
Keep an eye out for how much a provider charges in load costs or fees associated with the way you top up and access the money on the card.
Can I have a prepaid card if I have a bank account?
You can have a bank account and a prepaid account as they are two different types of accounts. For a prepaid debit card there are no credit checks carried out and financial information is not usually required to open an account.
Can I open a bank account if I am overdrawn with my current bank account?
You may not be able to open a bank account when your current account is overdrawn however an alternative solution is to obtain a prepaid debit card and account which will allow you to have your wages, benefits and any other income paid in. Also, you will be able to withdraw cash via ATMs, pay your bills and shop online or in shops using a debit card. Bear in mind that there may be fees associated with some prepaid cards