Pre-paid payment cards could help some consumers : Credit Card Guide

Pre-paid payment cards could help some consumers

Many people prefer to use plastic these days in order to pay for purchases, as these cards offer convenience, ease, and increased security, enabling consumers to make purchases without having to carry cash around.

However, it is not always possible for all consumers to get their hands on a credit card, and some people, such as those with poor credit, may not even be able to get a bank account that offers a debit card facility, thus reducing their options when it comes to plastic payment methods.

One industry official said that there were many consumer groups that may be able to benefit from pre-paid payment cards such as those with poor credit or those heading on holiday. He stated: "While the strength of the euro is of concern to holidaymakers, using the wrong foreign exchange product can be even more costly. If you are stuck with an uncompetitive debit or credit card and don't have time to get a new one, prepaid cards can be a good option. And you don't need to worry about overspending on your holiday budget."

An official from a firm that offers a pre-paid card with a credit builder facility added: "The significance of this is huge for people who have either lost their credit eligibility or for migrants who have no credit footprint at all. The creditbuilder feature enables these people to show credit card, loan and mortgage providers they can regularly make monthly repayments and so build their rating at no extra cost. It helps people take the first step back to credit eligibility."

However, consumers should remember that the cards are unregulated and therefore consumers are not protected under the Consumer Credit Act. One official added: "Prepaid cards are not for everyone. People have a choice about whether the benefits of having the card are worth the fees, and they are not forced upon people."

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