Prepaid card fees and why they don't matter anymore

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. There is the added convenience of loading your card online or at designated retail 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 minimise 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 due do the fees attached to these prepaid cards. However, there are a number of ways that you can save on these fees by simply thinking about how you intend to use your card to make your prepaid card an even more attractive proposition.

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 numerous providers provide free cards if a small minimum amount is loaded up front.
• Application Mechanism - You can apply for prepaid cards online, instore or via SMS using your phone. SMS is usually chargeable although it is convenient and you could save up to £2.50 on SMS application costs by using methods of making applications.
• 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 as these can be quite expensive and it is better to activate your card for Free online 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. Check the different loading methods that your prepaid card issuer provides and choose the method that is free or is the most cost-effective.
• 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, a number of zero fee POS cards are also available and you should get a POS fee free card if this is where you are most likely to use your card.
• 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 Point Of Sale (POS) fees, ATM withdrawals and loads. Choose a card fee structure that is right for you.
• 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 an excellent deal as the card FX rate on the card is better than high street FX providers and foreign exchange bureaus.

Find the right prepaid card for your business and you
Visit the consumer prepaid card comparison section at Prepaid365 to find the best prepaid card to suit your needs. If you wish to use a prepaid card for your business, visit the business prepaid card section.