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15 Oct 2019

Go Direct Personal Finance News  2009

Prepaid Cards – The Pitfalls

Prepaid cards are a useful cash management tool which is growing in popularity.    

However, it would be easy to pick the wrong card if you have not first been honest about your spending habits.

Prepaid Cards Selection

CARD NAME

TRANSACTION FEES UK

MONTHLY SERVICE FEE

ISSUE FEE

ATM CHARGE UK

Cashplus Gold - Premier

Nil

Nil

Nil

£0.99

Orange Cash Card

Nil

Nil

£5.00

2.95%

Kalixa

Nil

Nil

£6.95

£1.75

Escape

Nil

Nil

£9.99

£0.99

Neon

Nil

Nil

£9.99

£0.99

Source: Moneyfacts.co.uk 11.07.2012

 

 

 

Some of the traps that need to be sidestepped are the charges. Annual charges can range from nothing up to £29.99 a year. At face value £29.99 looks expensive, until you compare it to a card with no annual charge but a monthly one instead of £9.99, which is the equivalent of £119.88 per annum.

Withdrawing cash from an ATM can cost up to £3 per visit.

The sort of spender that visits lots of shops for small transactions could fall foul of an additional 99p per transaction, whilst regular top-ups can incur up to 4% charges per top-up.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:

“The type of spender you are should dictate which card would better suit you.  

“These cards are designed for everyday use just like a debit card. So money should not be stored on them unused for any length of time.

“If you get cash via the ATM, avoid getting just enough for one night out, as it would be cheaper to get cash for the week and pay one fee.  

“If you think you will frequently use the card to make small purchases, look for a card that does not charge you to do this.

“Despite the charging structures, prepaid cards can be cheaper than an unauthorised overdraft and have the added incentive of no bills for unpleasant letters from the bank manager or bank overdraft charges.

“These cards are not for everyone; if you have a debit card and rarely go overdrawn, then this card may not be for you. However, anyone who struggles to stay within their credit limit, and makes an educated choice of which card best suits them, can find prepaid cards a credible alternative way to spend.”

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

 

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Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

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