If you are struggling to get a standard credit card, or assess a bank account with a debit card, due to a poor credit history (CCJ’s etc) then a credit building prepaid card could be right for you. Credit building prepaid cards offer users many of the advantages available to credit and debit card holders, but they can be easier to get because the issuers never offer any credit to card holders (in the form of a credit limit or an overdraft). If used well they can also help you re-establish your credit profile, making it easier to assess credit products (like loans, credit cards & mortgages) in the future.
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Unlike traditional credit cards which require applicants to be ‘credit scored‘ before an issuer decides whether they can approve the customer or not (and at what credit limit/terms if they do), prepaid credit card issuers never take a ‘risk’ on consumers by offering them a credit line - Individuals using prepaid cards can only ever spend to the value of the balance they have loaded (even with "credit building prepaid cards").
Given that there is very limited risk associated with issuing prepaid cards; issuers are able to offer cards to a broader range of people than traditional credit card issuers might. This means that practically anyone over the age of 18, who has not been convicted of a serious crime, can access the products and enjoy the benefits that an improving credit score offers.
Although the UK prepaid card market is alive with competition and diversity, relatively few prepaid issuers offer “credit building” functionality. There are an increasing number, but choice is limited so you won’t be able to shop around too much. That said, the limited product choice means you can easily focus on specifics and decide which is the best for your personal circumstances.
Be sure to have a good understanding of monthly fees, transactions and ATM fees, but also what happens if you can't afford the monthly fee.
Remember if you are looking to get a prepaid product for foreign currency for a trip abroad then a prepaid credit building card might not be right for you. Equally if you have no need to improve your credit report then you might find that other prepaid debit card products without monthly fees are better suited to your needs.