We explain the fees and charges associated with spending on a prepaid card.
While the fees and charges associated with using prepaid cards are gradually coming down as more providers enter the market, they are still an important factor to take into consideration when choosing the best card for the way you spend.
Charges typically applied by prepaid card providers include:
- Set-up fee -
Most providers will charge a set-up fee when you apply for a prepaid card. This tends to be somewhere in the region of £5 - £15 and while some will give you a percentage of this activation fee back in the form of a starting balance on your card, not all do. - Service charge -
Some providers, although not all, will charge a monthly, or annual fee to cover the 'maintenance' of your account so this is an important cost to take into consideration when you're looking for a card. - Top up fee -
Many providers will charge you a top up fee each time you load cash on to your card. This will either be as a percentage of your top up or as a flat rate and may also vary depending on whether you top up your card online or at a registered retailer. With cards that charge for top ups on a percentage basis, it's important to check whether the provider specifies a minimum top up fee that will be applied regardless of how much you load onto your card. - Cash withdrawal fee -
Most providers will charge a fee each time you withdraw cash from an ATM and this will either be as a flat rate or as a percentage of the total amount withdrawn. The cash withdrawal rate will usually differ depending on whether you are using your card in the UK or abroad. - Card purchase fee -
Similarly, most providers will apply a fee each time you use your card to make a purchase. Again this will be either a fixed amount or a percentage of your total spend. - Inactivity charge -
Some providers will apply an inactivity charge if you haven't used your card for a while. So, if you're not planning to use your card on a regular basis then this is something to take into consideration. - Cancellation charge -
Some providers will charge you a fee when you come to close down your account. - Addional card fee -
A number of providers charge a fee when they issue an additional card on your prepaid account. This is something you'll need to think about if you plan to share your prepaid card account with friends or family.
For more information on minimising the costs and choosing the best prepaid card for your circumstances click here.
