February 14, 2006

Over the last 12 months we have seen an emergence of pre-paid.

Prepayment are very popular in the US and due to their success many banks and credit companies are introducing their own pre-paid credit card into the UK market.

The pre-paid credit card works using a simple method. You pay a signing up fee of around £9.95 and pay into your account how much you are willing to spend using the prepayment card. Whenever you make a purchase be it online or in a retail outlet you can only spend a maximum of what you have in your account.

This method helps you keep control of your finances and also allows you to control siblings spending urges!

The major drawback for a pre-paid credit card is the charges. As well as the £9.95 signing up fee some also charge a monthly fee, ATM withdrawal fee and even a cash-loading fee, which is highly controversial.

We at creditcards-gb have always been huge advocates of any methods that can reduce or control debt. The prepayment cards are in theory a very good option for consumers who have been in debt and need to control their spending. People have to be careful when choosing a pre-paid credit card and be fully aware of all the charges they could incur.

Our belief is that pre-paid card charges will come down as more banks and credit companies launch their own versions and thus will increase competition.

One of the pre-paid cards from MasterCard recently came under some criticism due to the market the card was aimed at. Splash was only launched a few weeks ago and was targeted at young teenagers. Many held the view that this was a risk that teenagers would not appreciate the responsibility of spending wisely with a credit card in their possession