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Debt barrier is 'key advantage' of prepaid cards

26 February 2010 16:21:20

Prepaid cards can help people avoid debt. image
Prepaid cards can help people avoid debt.
Prepaid cards offer many of the benefits associated with credit card usage while also reducing the risk of consumers racking up debt, it has been claimed.

David Rodger, managing director of national charity the Debt Advice Foundation, believes one of the key selling points of prepaid cards is that customers are prevented from spending more money than they have already loaded onto their card.

However, while Mr Rodger notes this is an important barrier to the accumulation of debt, he also cautions that the solution is not fool-proof.

"Basically the customer gets all of the advantages of using a credit card, for example being able to pay for goods over the telephone or not needing to carry cash, but without the risk or temptation of spending more money than they have," he confirmed.

"That's provided of course that they only load the card with money they have available and not money borrowed from elsewhere."

Research conducted by insolvency trade body R3 recently found that many people who have accrued credit card debt in the past could have avoided the problem had they taken time to understand the information they were given by providers.ADNFCR-2196-ID-19640509-ADNFCR ADNFCR-2196-ID-19464191-ADNFCR

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