Prepaid cards are becoming popular in the UK with just about everyone. This is probably because of how useful they are in a number of different circumstances or to different age groups. They:

• Allow teenagers to make online purchases
• Save you money while travelling abroad
• Make managing finances and budgeting easier
• Cut down the risk of identity fraud
• Reduce the risk of loss, compared to carrying cash
• Allow for online re-loading and account management, including statements
• Can be used in place of a bank account – you can have your wages loaded directly on to the card and set up Direct Debits (on some cards)
• Have no risk of debt
• Don’t require a credit check or bank account.

Like anything, they do have cons as well, such as the small cost of getting and using a card, and the spending limits that are imposed to prevent money laundering. However, there are ways to keep costs to a minimum and it’s easy enough to increase your spending limit.

However, given the long list of advantages, there’s no doubt that prepaid cards could be useful to the elderly too.

What is a prepaid card?

Unlike a credit or debit card, there are no credit facilities on a prepaid card as you can only spend the money that you have pre-loaded onto it – similar to a pay as you go mobile phone. The cards are currently available from three providers in the UK; MasterCard, Visa and Maestro. Because prepaid cards are accepted wherever these providers’ cards are accepted, they can be used in millions of locations around the world, wherever you see the logo for the card you have.

How much do prepaid cards cost?

Prepaid cards can be ordered online, in stores, post offices, and by post. Although some everyday prepaid cards have a monthly or annual fee, the majority just have an initial set up cost, which is usually around £5 (you will usually find that those without a setup cost have a monthly fee and those without a monthly fee have a setup cost). Free prepaid cards are sometimes available.

There are some charges for transactions and ATM cash withdrawals but these a relatively low and are a small price to pay for convenience.

If you are planning on using the prepaid card on holiday, you might want to consider getting a travel prepaid card as well as an everyday card because the travel card will be a LOT cheaper to use abroad (and will be cheaper than using most debit and credit cards abroad).

How can a prepaid card help the elderly?

As you can see from the bullet points above, prepaid cards come with many advantages. Specifically thinking of the elderly, prepaid cards can help as a tool for managing finances (especially when on a tight budget), they will aid you in keeping your money safe as you no longer need to carry cash, allow you to pay bills and buy shopping online rather than having to leave the house, and help you to prevent identity fraud.

1. Budgeting

Pensioners often find themselves turning to credit to sustain their lifestyle because during retirement they are usually living on a much smaller, fixed income. It can be very easy to run up debt, but it is important that you don’t because it will become harder and harder to repay the outstanding balance. This, along with many other factors, makes budgeting an essential part of everyday life for a pensioner.

With a prepaid card, you can load the amount of money you have to spend on certain items at the start of the week, or when you receive your pension allowance. Once it has gone, you cannot spend any more, helping prevent the elderly from getting into debt. Cash flow can also be managed in separate parts. For example, if you receive your income once a month, you can pre-load a weekly amount on to the card so that you have not spent everything by the second week.

2. Keeping money safe

It’s likely that, since the demise of the cheque guarantee card and the reduced number of outlets accepting the cheque as a form of payment, pensioners are more frequently turning to carrying cash. Carrying large sums of cash is a huge security risk; particularly if you are seen as more vulnerable and have a set routine (it would be easy for a thief to know when you had visited the bank, for example).

Instead of carrying cash, load the money onto a prepaid card and use it to make your purchases. With money being so tight, this will help to reduce your financial losses if you are targeted by criminals because they would not be able to use the card without a PIN or without your address details (you can cancel the card as soon as you know it is missing and get your money back, minus a very small card replacement fee).

Additionally, prepaid cards are often seen as safer forms of payment that credit or debit cards because they are not linked to any personal information. Your bank accounts and private data is not attached to prepaid cards, reducing the risk of identity theft should the card be lost or stolen.

3. Carers

If you care for an elderly person or relative, you (or they) might not feel comfortable using their credit or debit card, or carrying their cash (in case you lose it and have to replace it yourself). You can avoid this scenario with prepaid cards because the person you care for can load the card with the amount of money required to do the shopping and you can run the errands and pay bills, without any of the usual risks. It is also possible to pre-load the card and view statements online so the cardholder wouldn’t even have to leave the house and could still keep track of their spending.

4. Independence

Unfortunately as we get older we often lose a lot of our independence, particularly when it comes to our finances. A prepaid card can provide the cardholder with a sense of control, and can offer the reassurance that they are managing their own finances because they don’t have to divulge any personal banking information or provide access to their accounts. Keeping money safe is often a priority for the elderly, so regaining control of their own finances is often a relief.

If you think you, or someone you know, could benefit from a prepaid card, make sure you do a comparison first to get the best card for your needs and circumstances. You might also want to check out our blog on how to pick a prepaid card before you start to compare.