Prepayment cards, already big in the US, are rapidly taking off in Britain, says consumer research.
The cards, which are “charged” with credit much like a mobile phone, do not require users to have a bank account and do not carry any risk of going overdrawn.
Prepay cards already launched such as the Mastercard Cashplus, Cash2go and the Amex Travellers Cheque Card are being joined by new offerings, such as the Speedcard, i-money and i-Travel cards, and more providers are hurrying to get on the bandwagon.
The cards are targeted at people recently arrived in the country, people without a bank account and others who do not to wish to use a credit card.
The lack of a credit facility also makes them ideal for children.
The schemes come with a variety of charges, however, from monthly subscriptions to “charging” fees when money is placed on them.
Analysts say that users should compare credit cards fees against any cost that they will incur when spending cash on the prepay cards.
“The concept of a prepay card is not a bad one if the charges are understood and if the card is used responsibly,” said credit card analyst Richard Mason.
“For example, it takes the hassle out of carrying cash for those travelling abroad and for those who are either unable to or do not want to carry a credit or debit card, yet still want ATM access.
“It’s also useful for those who don’t want to exceed a certain budget – loading the card with a set amount will help prevent this.”
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