With Christmas just a couple of months away, many of us will be thinking about applying for a new credit card, or using an existing one, to help us manage the cost of buying presents, food and other festive essentials. Credit cards with introductory offers, such as 0% interest on purchases, are a great tool you can use to help ease the high cost of Christmas, but they are not the only tool that can help you with money management during the holiday season.

Prepaid cards are a great alternative to the plastic already filling our wallets. These cards offer guaranteed acceptance because they don’t come with credit facilities, making them ideal for people with a poor credit history. They can also help you to budget because you can never spend more money than you have loaded on to the card, so you do not end up paying for this year’s Christmas next year.

Another use for these cards is as Christmas prepaid gift cards. While you could simply slip some money or a gift voucher into someone’s Christmas card, why not give them a prepaid gift card instead so that they can use your present in all stores (worldwide) or for online shopping? Plus, not only will you be giving them the money on the card, you will also be giving them the card itself, which they can continue to use throughout the year to shop online and help them budget. This is especially beneficial for younger kids who are currently reliant on borrowing their parents’ debit or credit cards so they can shop online to get the best deals.

If you decide to give a prepaid card as a gift you will need to check whether the card you choose has a monthly fee because you (or the recipient) may not want to be paying this fee in future months.

How to apply for a prepaid card

It’s incredibly easy to apply for a prepaid card online and you can usually start using the card within 7-10 working days, once your card has been made and sent to you in the post. If you want the card in time for Christmas, either to use for your own Christmas shopping or to give away as a gift, here is a guide to the application deadlines you will need to work to.

These dates are provided by Compareandsave.com as a guide only and are based on the application running smoothly. If demand is unusually high or if there are delays with the postal system, it may take longer for you to receive your prepaid card.

Budgeting for Christmas

According to research from R3, the insolvency trade body, conducted at the start of December 2010, more than five million people had already taken on debt to pay for Christmas 2010, an increase of nearly 50% on the previous year. It was also found that more than one million people believe it will take them more than six months to pay off their Christmas debt.

Whether we admit it or not, we all go overboard at Christmas sometimes, especially when we see the ‘perfect gift’ and we have a credit card burning a hole in our pocket. Prepaid cards can help us limit our spending and prevent a post-Christmas debt hangover.

Prepaid card charges

Prepaid cards do incur charges but these will vary significantly between cards so it is important to look out for them when you compare prepaid cards.

The most common charges found with prepaid cards are:

• Application or set up fees: these usually range from £5-£10, although you can get some cards for free, and are payable upon application
• Monthly fees: these are    sometimes applied in place of the individual fees for reloading and withdrawing cash and can vary in price
• Reload fees: there may be a small fee applied when the user reloads the card, but there is often a free method of topping up the card
• ATM cash withdrawal fees: this charge is either a flat fee of around £1.50 or a percentage of the value withdrawn
• Transaction fee: this fee usually only applies when the card is used abroad but it is an important one to check if you think you, or the recipient, will use the card abroad.

These charges often put people off when they look to apply for a prepaid card but it is important to remember that the alternative could potentially see you paying high interest charges on a credit card, especially if you have trouble with money discipline and budgeting. It could be argued that the fee is a small price to pay to prevent unmanageable debts next year. Also, if the card is a gift, you could imagine that the recipient will save a lot more than the fees by using the card to buy things online at a cheaper price than available on the high street.

There is still time to apply

It’s not too late to change your mind and start using a prepaid card this year. In general, you don’t need to apply for a prepaid card until 7-10 working days prior to the date you require it, but this can differ between providers.

The table above should provide you with a guide as to when you should apply for prepaid cards if you want to be able to use them for your Christmas shopping, or to give to friends and family as Christmas prepaid gift cards.

Remember that external factors such as peaks in demand or delays in the postal system could cause your prepaid card to arrive late. To ensure that you receive your card in time and prevent disappointment, order it as early as possible.