In this article we round up the best prepaid cards around. If you want to skip all the preamble, just use the quick-links below to find the best prepaid card(s) for:
Prepaid cards work similar to other types of plastic. You can use them to make purchases, or withdraw cash just as you would with a traditional debit or credit card. Where they differ is that they have to ‘loaded’ with cash before you can spend.
Most people are familiar with the concept of ‘pay-as-you-go’ that’s exactly how prepaid cards work. Since you can’t spend any more than you load on to the card, there’s no borrowing involved, and so no credit checks are required.
This makes prepaid cards popular with those who have poor credit history, or have little or no credit history. They’re also widely used for travel, budgeting, rebuilding your credit rating, business expenses, etc..
The costs of prepaid cards
The cards aren’t free; the provider needs to make their money back somehow and it’s usually in the form of monthly fees, loading fees, inactivity fees, or a combination of each. It’s important to read the small print and understand exactly how much the card is going to cost you before you take it out.
Benefits and advantage of prepaid cards
- Budgeting – you can only spend what you’ve put on the card
- Fraud – If you can only lose the amount you have on your card and it’s not tied to your bank account
- Ease – No credit checks required so it’s easy to get one
- Travel – on the right card you can store foreign currency and save money on changing cash
The disadvantages of prepaid cards
Since there is no credit involved, spending on prepaid cards isn’t covered under Section 75 of the Consumer Credit Act 1974. This protects credit card users against the retailer going bust, or goods arriving faulty or damaged. On credit cards your purchase must be between £100 and £30,000 to enjoy this protection.
Nearly all prepaid cards are either VISA or Mastercard, so if ever you do encounter a problem with a retailer, you might be able to get your money back through the ‘chargeback system’
Another point of note is that unlike bank accounts (where your debit card would draw from) prepaid cards are not eligible for protection under the Financial Services Compensation Scheme. So if your card provider goes bust, you will lose the money you’ve loaded on to the card.
The best prepaid card(s) for…
Like most things in life, there’s no one best solution when it comes to prepaid cards, there is however the best solution for your particular type of spending or intended use. With that in mind we’ve compiled a list of the best cards for travel money, credit rebuilding, budgeting, business and general use.
Best prepaid cards for Travel
Note: There's a lot of competition in this area, and the market moves fast. See our post on the best credit cards for foreign spending, for an up to date picture.
Our top pick: Kalixa Pay
There’s a one-off charge of £6.95 to apply for the card, but no monthly or annual fees, and card renewal is free.
Loading the card is free via internet banking or debit card, but there’s a 1.72% for loading via a credit card (not recommended).
The Kalixa Pay card holds your balance in GBP and converts it to foreign currency only when a purchase or withdrawal is made. It uses the MasterCard exchange rate so there’s no commission on conversion.
Using the card for purchases is free, but you’ll be charged £2.25 each time you use a cash machine abroad, or £1.75 in the UK, so it’s best to larger infrequent withdrawals up to the maximum 24 hour limit of £300.
What we like
- No load fees (online and debit card)
- No transaction fees
- No commission
What we don’t like
- ATM fees (£1.75 in the UK, £2.25 abroad)
- Low daily withdrawal limit (£300)
- Low daily load limit (£750)
Best prepaid cards for rebuilding your credit rating
Our top pick: Cashplus Creditbuilder
It may seem bizarre, but one of the best ways to rebuild or improve your credit rating is actually to use a credit card. The irony is that if you need to rebuild your credit worthiness, you’re not likely to be in a position to apply for a credit card.
This where certain prepaid cards can come in handy. Pick the right type of prepay card and it will show up on your credit file as a loan. Each time you make a payment onto the card, the amount owing on that ‘loan’ is reduced until you finally pay it off. This helps to boost your credit worthiness as it displays a history of successfully managing your credit.
Our top pick for this purpose is the Cashplus Creditbuilder. The premise is simple. When you take out the card you’ll be lent £71.40 which you then pay back in 12 monthly instalments of £5.95. It’s important that you never ever miss a payment on this card as that will leave you in a worse position than you started.
Top ups via bank transfer, standing order, and at the Post Office are free, but due to a £2 ATM we wouldn’t advise ever using this card to withdraw cash. It’s fine for online shopping or paying at the point of sale though, and you’ll earn cashback on purchases made from 100s of highstreet retailers such as Boots, Tesco, and M&S.
Best every-day prepaid credit cards
Our top pick – Pockit Mastercard
When it comes to everyday spending on a prepay credit card, the Pockit Mastercard by Wirecard is the clear winner. There’s no transaction or monthly fees, and you get up to 10% cashback from the likes of Halfords, B&Q, H Samuel and other top highstreet retailers.
There is a 99p setup fee, and a 99p fee to withdraw cash, but of these are the lowest around. That being said it’ would still be wise not use it for cash withdrawals. All of their fees are clearly explained on their website with no hidden extras.
Next best in this arena is the Ffrees Family Account. There’s no monthly fee, but there is a £2 dormancy fee if the card isn’t used every two months. Sterling transactions are free and there’s just a 75p withdrawal fee for using UK ATMs. You must keep a minimum of £10 on the card, and it’s best to top up via bank transfer to avoid fees. Note there’s no debit card top available.
Finally there’s the Cashplus Activeplus. This card has a £5.95 monthly fee, although there’s no fee when your balance is zero. Transactions are free as are electronic topups or topups via the Post Office. There is however a steep £2 ATM fee, so try not to withdraw cash and this card.
Best prepaid cards for business
Our top pick – Cashplus Business Expense
Prepaid business credit cards are a simple and cost effective way of managing business finances, and their flexibility means that they could be suitable for a number of different businesses in different ways. Given to employees they help to control expenditure, reduce fraud, and provide an audit trail of that’ll keep your accountant happy. What’s more, they’re much cheaper than the equivalent corporate credit card.
Many of the top credit card providers provide prepaid cards for businesses but unless you’re likely to take out over 100 cards, or load over £250,000 don’t even bother approaching them.
For small and medium business the choice is somewhat limited. We like the look of the FairFX Corporate Prepaid card with it’s low ATM charge, no transaction fees or monthly fees, and decent exchange rate, but are put off by the £250 setup fee.
Excluding foreign currency cards, that leaves the Cashplus Business Expense card as our top choice in this area. It costs just £69.99 to setup and has a £2 ATM charge, but there’s no transaction, loading, or monthly fees. Just don’t use it for foreign purchases as there’s hefty 2.99% load on foreign currency.