Compare prepaid cards

Last updated: 23 April 2021

What is a prepaid card?

Prepaid cards are reloadable money cards. You add cash to them and top them up when the funds run out, just like you would with a pay-as-you-go mobile phone. A prepaid card or prepaid debit card can be used to make purchases online or in person. You use it in the same way you'd use a debit or credit card.

You might hear it being called a 'prepaid credit card' but actually you don't get credit with one of these. Once the balance reaches £0, it can't be used again until it's reloaded. Some people also call them 'cash cards'.

How do prepaid cards work?

Some retailers sell prepaid cards which you can load up with money, or you can get them online.

They're designed for everyday spending and there's usually a limit on how much you can load. The limit varies, depending on where you buy the prepaid card from. If you haven't loaded your prepaid card, you can't spend on it. This makes them very helpful if you're trying to stick to a budget.

Most prepaid cards are either Visa or MasterCard. This is the company that processes the transactions on the card. So, once you've loaded your card, you can use it any restaurant, shop or online retailer that accepts Mastercard or Visa.

The advantages of a prepaid card

• Budgeting: You can only spend what you load onto a prepaid card, so they're very safe from a budgeting perspective. If you're prone to overspending, a prepaid card can be a good way to make sure you stay on budget.

• Security: Prepaid cards limit the damage that scammers and fraudsters can inflict on you. The most you could ever lose is the amount you've loaded on to the card.

• Students: They're a good way for parents to teach young people about financial responsibility. Young people and students can learn to budget if their parents only give them access to small amounts of money.

• Travel: If you don't want to carry cash when you're travelling, prepaid cards protect you. They normally let you cancel them if they're stolen and aren't connected to other accounts.

• No credit checks: You don't need to be credit checked to get a prepaid card. This means they're a good option for people with bad credit history or those who've just moved to the UK.

• Simple application: The application process for a prepaid debit card, UK wide, is quick and easy.

We're here to help you find the best prepaid cards

How to choose the best prepaid cards for you

The best prepaid cards, UK wide, are the ones that are the cheapest and easiest to use.

Some of the features and costs to look for when you're trying to decide on the best prepaid cards are:

• Application fees: Most prepaid cash cards charge a fee when you open your account. But some cards waive this if you load over a certain amount.

• Monthly fees: Most cards charge a monthly fee. This ranges from £2-£5.

• Renewal fees: Just like your debit card, your prepaid cash card will expire after three years. Some cards charge a renewal fee to get a new card. This can also be waived if you're happy to load a certain amount of money.

• Transaction/withdrawal fees: Most prepaid cards charge a fee for every transaction you make. For ATM withdrawals, the fee is either a set amount, such as £2, or a percentage of the transaction.

By looking at these charges before you choose your prepaid card, you should be able to find the best available prepaid debit card that works for you.

Are there any disadvantages to a prepaid card?

Prepaid cards aren't perfect, and there are some things to be aware of. The disadvantages include:

• No section 75 protection: With a regular credit card, you'll get free protection on purchases over £1,000. You don't get this with a prepaid debit card, but you do get access to Visa and MasterCard's chargeback schemes. That means you can get your money back for faulty goods, services that aren't provided, and goods that aren't delivered when a company goes out of business.

• You can't use them everywhere: Sometimes, when you hire a car or check into a hotel, they take your card as a security deposit. When they do this, they ringfence funds until you settle the bill, so many people prefer to use a credit card. With prepaid cards, this means there will be a chunk of your money that you can't access until the bill's cleared.

• Fees: There might be hidden fees, so make sure you learn about all the fees a prepaid card charges before you open it.

Types of prepaid debit cards

Prepaid cards` with sort code and account number

Sometimes, a prepayment card will offer basic banking facilities, such as a sort code and account number. This means you can have direct debits and standing orders coming from your prepaid card. This is useful if you want to set up payments for recurring bills.

Visa vs Mastercard

The main difference between a prepaid MasterCard and prepaid Visa card is the exchange rate for spending abroad. The rest of the costs are set by the card provider. It's usually better to find the cheapest prepaid card, UK wide, than it is to specifically choose between Visa and MasterCard.

What's the difference between MasterCard and Visa?

Prepaid debit cards for budgeting

Prepaid bank cards are a useful way to manage your spending. Once you've loaded the card with cash, you pay a monthly fee for the card. But the transaction and withdrawal fees are lower.

Find the best prepaid card

There are a few types of prepaid currency card available. You'll need to decide which type is the best prepaid currency card for you.

Single currency prepaid cards: You can load up the card with Euros and use the card when you're abroad. This way you can save on currency conversion fees that most banks charge on debit and credit cards.
Multi currency prepaid cards: These prepaid cards let you make purchases abroad without paying fees. You can load any currency on to the card and use it in any country. The transactions will be automatically converted into the local currency. You can use our comparison to decide which prepaid credit card for travel you want.

Prepaid cards for bad credit

If you've had trouble getting a card because of your credit history, a credit-building prepaid cash card can help you improve this. Anyone can get a credit-building card, but you have to opt in for service.

A credit-building prepaid cash card lends you a year's worth of monthly payments, which range from £5 to £10. You are then supposed to repay the amount over a 12-month period. If you keep making the repayments, your credit score will improve.

Prepaid cards for students

A pay-as-you-go prepaid card, or 'pay as you go credit card' is a good way to help teenagers and students to become financially responsible. It also helps parents keep track of their teen's spending. While these don't have monthly fees, they're not totally free prepaid cards. They charge higher transaction and withdrawal fees.

How to use a prepaid card

Using a prepaid Visa or prepaid MasterCard, UK wide, is just like using a debit or credit card. You can use them online by entering the number and expiry date, or over the counter by entering your PIN.

Most cards now let you pay with contactless, which can be used for transactions up to £100.

The UK government increased the contactless transaction limit to £100 to encourage people to use contactless where possible during the coronavirus pandemic. It is aimed at helping to avoid the spread of COVID-19 as it removes the need to enter your PIN on card machines, or to handle cash.

How to top up a prepaid card

There are several ways to top up your MasterCard prepaid card or your prepaid Visa card, UK wide. The most common ways are:

• Online: You can sign in to your account on the prepaid card provider's website or app and add money to it and use it like a regular credit or debit card.

• Cash: Some banks and retail shops offer PayPoint services, where you can pay cash. This is then loaded on to your prepaid card.

• Bank transfer: Some cards let you transfer funds directly from a current account. You'll need to know your prepaid card's sort code and account number to do this.

How much can you load on a prepaid card?

Different prepaid cards have different limits for the maximum balance. Even the way you top up might affect the limit. For example, you may be able to load £1,500 using a bank transfer, but the top-up limit using cash at a PayPoint might be £250. Some also have daily limits and monthly limits.

Are there any free prepaid cards?

There are free prepaid cards, but this just means that they don't charge any application fees. Most free prepaid cards, UK wide, still charge transaction and withdrawal fees when you use the card. So they're not totally free.

How to buy a prepaid card online

You can buy prepaid cards at retail locations (such as newsagents), online or over the phone. They're also available from some banks and credit unions.

If you buy a prepaid card online, simply fill out the online form with your name, contact details and the amount you want to load. You may be issued a 'virtual card' at first and receive a physical card in the post later.

Which card should you choose?

The best way to choose a card is to think less about the payment network and more about your specific requirements.

Most prepaid cards are either Visa or MasterCard, and both companies offer a variety of different options. The most important feature to look at is the card's rates and benefits to help you decide what you need, rather than choosing Visa or MasterCard.

By comparing the advantages of individual cards over providers, you should be able to find options that can save you money or offer great rewards, like cashback.

How to use a prepaid card abroad

You can use a prepaid card to spend in foreign countries and currencies as an alternative to using cash, your credit card or your debit card.

You load money on as you would with a standard prepaid card - by using your debit card, a bank transfer or adding cash in person.

When spending abroad you can withdraw money from cash machines and spend on the card in shops and restaurants.

Prepaid cards do not let you borrow money, so you can only spend the money you have already added to your balance. Otherwise, you can use it in the same way as a credit or debit card.

Make sure to compare prepaid cards so that you get the best deal on exchange rates and transaction fees.

You can find out more about travel prepaid cards here.