Internet shopping no longer has to stretch your credit card. There are now a range of prepaid alternatives to credit cards, that allow you to buy that games console, DVD or handbag, but without using credit to do so! In addition to high street and online shopping, prepaid cards can be used for sending money to family and friends, for using ATMs on your travels, and even for giving your child a plastic ‘emergency fund’.
Best of all, prepaid cards are usually not subject to a credit check, as you are accessing funds you have already paid up-front.
The beauty of the prepaid card is that you are spending your own funds, which you have ‘loaded’ on to the card. It is not a credit card, lumbering you with hefty interest charges. Moreover, it is not a debit card linked to your bank account, and draining any overdraft facilities that might be available there. Your prepaid card contains as much as you have loaded on, and no more – so overspending is not possible.
Once your cash has been loaded on, the actual use of a prepaid card is similar to using other cards. It can be used as an alternative to store cards for purchases in High Street shops, for telephone shopping by reading your card number over the phone, for mail order shopping by including the card details on your order form, and for online shopping, by keying in your card number and details at the website checkout. And you are governed by how much of your own cash you have left on the card at all times.
Until now, prepaid cards generally cost up to £9.95 to sign up, and then charged monthly fees of £4 or more to subscribe. But the market is now undergoing a revolution, due to a product innovation by telephone provider O2.
For O2 customers, a pair of pre-paid VISA cards are now available that are totally fee-free (except where some ATMs make a charge for cash withdrawals).
The ‘Cash Manager’ card can be loaded with up to £10,000 per year and is not only a safe, secure alternative to carrying cash, but updates you with your current balance by free text message, every time you use the card.
The second O2 card is ‘Load and Go’, a card where you can load up any amount subject to a limit of £1,800 per year. This card is ideal for parents who wish to give children going off travelling an ‘emergency stash’ that cannot be overdrawn. The card can be used at ATMs and anywhere that takes VISA, but again you may spend only as much as is loaded on the card. Again, a text message updates you on the card’s balance after each use, so that you are alerted to the financial activities.
