As the credit crunch worsens and recession sets in, the popularity of prepaid cards continues to rise with good reason. Prepaid cards have many benefits which include:

• Easily Available – There are no credit checks and no bank account is required to get a prepaid card which means you can get a card even if you have a poor credit history or CCJ’s as long as you can confirm your identity and address.
• Stay in control and no debt risk – With a prepaid card, there is no risk of debt or overspending as there is no overdraft facility on a prepaid card and hence, they are an ideal way to budget for yourself or help to manage your children’s spending.
• Excellent for Travel – Many providers offer dollar and Euro prepaid cards and an exchange rate which is much better that that typically available from high street bureau de change and FX providers. Add to that the convenience of being able to top-up your card online or at various other top up locations.
• Global Acceptance – Being MasterCard, Visa or Maestro branded, you can shop anywhere in the world where these scheme brands are accepted – on the Internet, over the phone and on the high street.

How to save on prepaid card fees?

Given all the wonderful benefits of prepaid cards, it seems quite surprising that prepaid cards have not been more widely adopted and that is probably down to the fact that most prepaid cards do have some fees attached to them. However, there are numerous ways to save on these fees to make prepaid cards an even more attractive proposition for you.

Tips to save fees on prepaid card application and usage

• Application Fees – Choose your prepaid card carefully. Typically card applications cost between £4.45 – £9.95 but there are a number of cards which are available free of charge if you top them up with a minimum amount at the outset.
• Application Mechanism – You can apply for prepaid cards online, instore or via SMS using your phone. SMS whilst convenient is usually chargeable and you could save up to £2.50 on SMS application costs by using other application mechanisms.
• Activation Fees – Choose a prepaid card in which the activation fee is included within the application fee. Also, most card providers allow you to activate cards online or via telephone. Avoid premium telephone numbers and stick to online activation where possible.
• Top-up or Loading Fees – Loading a Prepaid card with funds is usually free from most providers as they are keen for you to load your card. Look at the different top up mechanisms that your prepaid card issuer provides and choose the method that costs you nothing or next to nothing.
• Point of Sale Fees – Prepaid card providers typically charge a fee for using your prepaid card at point of sale and this can vary from a few pence to up to around 2.95% of your transaction value. However, there are a number of providers who provide free usage at POS and hence, if you think you will be using your card mostly at POS, get a card with zero POS fees.
• ATM Fees – The majority of card fees are likely to come from making ATM withdrawals and these tend to be pretty steep. Where possible avoid withdrawing money at ATM’s with your prepaid card but if you reckon that this is the main use and you are likely to make numerous withdrawals, choose a card which has low withdrawal fees. There are a few providers who allow a couple of free ATM withdrawals and then charge a small fee for subsequent withdrawals.
• Pay Monthly or Pay as you go Tariffs – Some cards providers give you the option of choosing a Pay monthly or a Pay As You Go tariff. Based on that tariff, you can save on POS fees, ATM withdrawals and top ups. Choose a tariff that suits you best.
• Card currency – For travel cards where usage abroad is the main criteria, choose a card currency which is local to your travel destination. Euro and Dollar are two most popular options available for travellers travelling abroad outside the UK which means that you pay no FX rate when using your Euro card where Euro’s are accepted or your dollar card where USD is the acceptable transaction currency. You are already getting a better deal as the FX rate on the card is better than what you would get from high street foreign currency providers.

Prepaid Credit Cards or simply prepaid cards as they are also known have been creating waves and hype. The financial service equivalent to the mobile phone prepaid cards means that you can load money on to the card and then use that card to spend online, in-store and over the phone wherever your card is accepted. Getting a card is extremely easy – there are no credit checks, no bank account requirements. Simply produce some valid ID and a valid address and the cards in your back pocket sooner than you know it.

Everyone Loves Prepaid – NOT!

Yes, it’s true. For all the power of the pre paid card and all its wonderful benefits, pre-paid cards attract a lot of criticism as well.

The reason is simple, pre-paid cards typically have fees attached to them which means that you need to pay a fee to load your card and to use your card. Strangely enough, this fee is typically very small but not small enough to prevent the media going all gung-ho on it and criticizing the entire concept of prepaid. We are so used to the idea of free banking, that the mere thought that we actually have to pay for a little bit of added value service seems to be unacceptable.

The point to make is that consumers generally look to these products as those which give them freedom. However, what they are also seeking is freedom from fees just like they would have with other payment mechanisms such as credit or debit accounts with their bank. The reason is that they still view credit and debit cards to be fee free propositions and expect these new payment mechanisms to be just the same.

Prepaid Cards Fighting Back

Well, it seems that pre-paid companies are fighting back by providing us with added value propositions so that are protestations melt away. Fighting back are a number of pre-paid cards like the BaBeeCard, the Rational FX Travel Money, Caxton FX and Virgin Money.

1.General Spend Cards

Top of the hoop would be the BaBeeCard as a general spend card. Should really have been called the “Mummy card” because it is the one product in the market which truly delivers exceptional value to mummies – young, old and expecting.

With numerous discounts on shopping like Argos, ASDA, Alton Towers, Boots, Buyagift, Comet, Carphone Warehouse, Debenhams, JJB Sports, Halfords, H.Samuel, House of Fraser, Homebase, HMV, Legoland, Mothercare, Ocado, Sainsbury’s, Selfridges, TopShop, Waitrose, WH Smith and many many more, the BaBeeCard promised to deliver huge savings across just grocery and petrol shopping alone thereby offsetting the fees to some extent.

Key: The discounts and cash-back offers mean that you can offset the fees of using the card by availing the offers.

2. Travel Money Cards.

Cards that immediately come to mind are the Rational FX Travel Money Card and Caxton FX Prepaid Travel Card. Travel money from specialized FX providers like Rational FX and Caxton FX means you get a fantastic exchange rate which is way better than the high street exchange rate. Avoid Exchange rates at the Airport at all costs because they are simply too high – exorbitant even.

With travel money cards, you basically get market leading exchange rates put on to a card. Typically these cards tend to be free cards with the best FX rate in the market delivered on a convenient, safe and secure prepaid card, in a choice of currencies ready to deliver savings when you use your card at over 28.5 million worldwide locations. The media does quite like travel cards but not as much as they are loved by consumers and travel cards along with money transfer cards represent the fastest growing segment of the market by far.

Key: The savings on fx rates and interchange mean help offset the costs which are typically nil anyway. It is best to choose a a travel card from an FX provider as opposed to a general prepay card provider. Just a couple of prepaid propositions that are changing the context of how pre paid cards are viewed by consumers.

Read all about prepaid cards like BaBeeCard, Rational FX, Caxton FX and Virgin Money Prepaid that are shaping the way that consumers think about pre pay cards at Prepaid365 or find out more about the brand new O2 Prepaid Cards.

Divya Sharma is a senior editor at Prepaid365 – the UK’s prepaid card comparison portal and an expert in the prepaid card industry. With over a 100 prepaid cards listed, Prepaid365 remains the UK’s leading prepaid card comparison portal providing customers with genuine, unbiased, reviews and ratings of business and consumers prepaid cards in the UK.