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Prepaid cards: Beware the pitfalls

Prepaid cards: Beware the pitfalls

Category: Money

Updated: 12/07/2012
First Published: 12/07/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Prepaid cards are a popular concept whereby customers can load cash onto their card to spend in restaurants, shops and withdraw money from cash machines, but do be aware of the pitfalls, says Moneyfacts.co.uk.

It is vital that cardholders are aware of charges and fees that they may incur as these can add up if a series of transactions are made. Making numerous withdrawals from an ATM machine can prove expensive, with some cards charging up to £3 a time.

Terms and conditions should be checked prior to taking out the card to ensure it suits spending habits and lifestyle needs.

Sylvia Waycot , spokesperson for Moneyfacts.co.uk, said: "The type of spender you are should dictate which card would better suit you. If you get cash via the ATM, avoid getting just enough for one night out, as it would be cheaper to get cash for the week and pay one fee. If you think you will frequently use the card to make small purchases, look for a card that does not charge you to do this."

"Despite the charging structures, prepaid cards can be cheaper than an unauthorised overdraft and have the added incentive of no bills for unpleasant letters from the bank manager or bank overdraft charges.

"These cards are not for everyone; if you have a debit card and rarely go overdrawn, then this card may not be for you. However, anyone who struggles to stay within their credit limit, and makes an educated choice of which card best suits them, can find prepaid cards a credible alternative way to spend."

Compare everyday prepaid cards

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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