Prepaid Credit Card FAQs

Q: Do prepaid credit cards come with credit?

A: Despite their name, prepaid credit cards do not come with a credit facility like a credit card. One explanation for their name is that it describes how you can use a prepaid card where you can use a credit card, for example online and over the phone. Prepaid Cards only have credit on them once you have loaded the money on to the card. You will also see that in some places prepaid credit cards are called prepaid debit cards for much the same reason.

Q: Can prepaid cards help to build my credit history?

A: The majority of prepaid credit cards do NOT help you to build your credit history because there is no credit facility attached and so no link to your credit report. The only credit building prepaid card currently on the market is the CashPlus Prepaid Card which lends you the total annual cost of the card and requires you to pay it back as a monthly fee (most prepaid cards come with a monthly fee anyway). By keeping up with these very small monthly repayments, you will help to build your credit rating.

Q: Are prepaid cards free?

A: The majority of prepaid cards are NOT free because they come with either a set up fee or a monthly fee or both. Those that are free tend to be exclusively available to existing customers of a certain brand, for example the O2 Cash Manager Prepaid Card is free to get and use on a day-to-day basis, but is only available to O2 customers.

Q: Where can I use my prepaid card?

A: Your prepaid card will either be a Visa or MasterCard and you can use it wherever the relevant sign is displayed. This includes shops worldwide, on the internet and over the phone.

Q: How do I check the balance of my prepaid card?

A: You can check the current balance of your prepaid card via text and some even come with online account management so you can monitor your card balance and spending habits.

Q: Is my prepaid card covered by Section 75 of the Consumer Credit Act?

A: The shortest answer to this question is no because Section 75 only applies to credit agreements and, since there is no credit facility with a prepaid card, the protection doesn’t apply.

Q: Can I get into debt or go overdrawn on my prepaid card?

A: No. This is because a prepaid card is not linked to a bank account or credit facility so you can only spend what you load on to the card and nothing more.

Q: I have a poor or non-existent credit history - will I get accepted for a prepaid card?

A: Since there is no credit facility on a prepaid credit card, there is no need for providers to search your credit history before accepting you. Even the CashPlus Prepaid Card will accept you with a poor or non-existent credit history because the amount you borrow over a 12 month period is so small that the company feels a credit check is unnecessary.

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