Prepaid Credit Cards UK

Prepaid cards are a relatively new thing, and they’re a great way for parents to assist their kids in learning simple money management in a controlled way. By allowing your child to have a prepaid credit card, they learn how to use a credit card in a sensible manner without any risks of going into debt. Meanwhile, parents can easily see what their child is buying and steer them when needed.

These cards can be great tools to teach yourself money management as an adult too of course. Having a prepaid credit card means that you can enjoy the benefits a credit card can offer you like being able to book tickets, buy things on the internet, and so on, but without the risks involved with a traditional credit card. The primary advantage is that because you load the money on to the card before you can spend it there is no risk of going into debt as there would be with a traditional credit card, so it’s ideal for anyone living on a budget, or who has bad credit, or who simply wants to make sure they don’t get into debt.

Prepaid credit cards work in a fairly easy to follow way. You decide how much money you want to be able to spend on that card, and load the card with this amount from your own cash. From this point onwards, the card works in pretty much the same way as a normal credit card in terms of buying power. You can book a hotel room with it, buy tickets to see your favourite band, or do your Christmas shopping online. The difference is that when you make a purchase, instead of building up a debt which you’ll have to pay back at a later date, instead, the balance on the card is reduced until it reaches zero at which point, you have to reload the card before you can spend any more.

As with a regular credit card, there are still fees involved. Most cards charge you an activation fee to set the card up initially, and some go on to charge you a monthly fee to keep it going. Other cards waive the monthly fee as long as you have a minimum balance of a set amount on the card. Another method some cards use is to charge you a small amount of interest every time you make a purchase on the card which is taken from the card balance at the same time as the purchase is made.

These cards are great at helping you to learn good budgeting skills and money management, you’ll still need to make sure you know how much money you have, and what you are spending it on, but while you are learning you don’t take the risk of getting into debt.