Guide to Prepaid cards - 1/5
Prepaid payment cards are a recent phenomenon. They have exploded in popularity
across America over the last 10 years and are now taking off in the UK.
In this guide, moneysupermarket.com will answer those questions explaining the idea
behind them, their benefits and limitations.
If you would like to skip directly to another part of this guide, click on one of
the following links:
Prepaid card uses and benefits
Prepaid card fees and charges
Which card is right for you?
Frequently Asked Questions
What is a prepaid card?
The prepaid card is far from a new idea. How many of us have used a prepaid gift
card or a prepaid mobile phone SIM card? The concept is basically the same. A prepaid
card looks like a credit or debit card, and gives users the ability to purchase
products and services with a card but with a crucial difference - you can only spend
the balance that has been preloaded onto the card. This means there is no risk of
running into debt as it has no credit or overdraft facility.
How do they work?
Money can be loaded on to a prepaid card by cash at a bank, Post Office, at Payzone
or PayPoint terminals, bank transfer, through your employer or even by another credit
card.
When using for purchasing at a high street store, they work in exactly the same
way as a credit or debit card - you simply hand the card to the cashier. You will
be asked to enter your PIN number (supplied with the card) on an electronic keypad
or to sign a payment slip so your signature can be matched with that on the back
of the card (if there is no Chip on the card). The total amount will be taken from
your card immediately and the transaction is complete.
To shop online, you'll find the item you want to buy and click on to the website's
"checkout" page before filling in your details and those of your prepaid card. As
long as you have enough cash loaded on your card (the website checks this by the
usual means of an authorisation), the purchase is completed and your item will be
shipped to you.
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