Prepay credit cards on the rise
(07 February 2006)

Pre-payment credit cards may provide a welcome longer-term solution to the UK's debt problems, with their popularity increasing by the month after evidence of similar schemes' successes in the US.

Such cards do not require the user to have a bank account or any kind of credit check, and are largely aimed at people who might for whatever reason not qualify to receive a conventional credit card.

They do, however, harbour certain charges – such as for ATM withdrawal and in some cases a cash loading fee charged when cash is put on the card.

Mastercard's Cashplus is among the better-known pre-payment cards already on the market, though it is starting to see an increasing number of rivals join the fray such as Speedcard, i-money and i-travel.

Richard Mason, director of credit cards at moneysupermarket.com, praised the idea but pointed out that the charges involved might act as a deterrent.

He said: "The concept of a prepay card is not a bad one if the charges are understood and if the card is used responsibly. 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.

"Over a year…fees can add up and consumers who want to go for the pre-payment option need to weigh up whether the charges justify the need for the card."

It may be something worth considering – and, if you're looking at sorting out a sustainable credit source for yourself and need some ready cash in the meantime, a payday loan of £80 to £1,000 will help you see the next few weeks through.

In your account by the very next day, a cash advance could even help you top up any pre-pay credit facility if money is tight – and you don't have to pay a thing back until your next payday.



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