If you’re considering getting a mastercard prepaid credit card then this article will help you get the right one.
Prepaid credit cards are for people that either have no credit history and find it difficult to get approved by banks for a standard credit card, or they have poor credit history and also can’t get approval, as the better providers don’t reqire any credit checks at all.
However some people just prefer not to use credit and therefore avoid interest rates but still enjoy the flexibility that paying with Mastercard provides.
Whatever category you fall into, it is still important to know what to look for in a prepaid card before you sign up.
A Mastercard prepaid debit card is actually not a credit card as such, as you are not operating with credit, and it is more like a standard debit card but again not even the same as this. Debit cards when used take funds out of your bank account, however a prepaid debit card doesn’t even require a bank account at all.
Although these types are cards are good for people with bard credit, conversely they won’t help you build a good credit history either, because none of the transactions are reported to major credit agenices such as Experian, TransUnion or Equifax.
What About the Fees?
Sadly like most thing in the financial world, nothing comes for free these days, and Mastercard prepaid credit cards are no exception. The fees vary depending on what company you get your card through. The main fees you should checkout before signing up are whether they have an activation fee (most do) and also if they have a transaction fee for every purchase you make with the card.
There’s also a list of other fees that some company has but others do not, these include but are not limited to, cash withdrawal fees, account statement fees and also there is a inactivty fee if you don’t use your card for a month, but this fee is low and usually only £1. One of the better choices out there currently in the UK is the Bread Mastercard.
Below is a list of the most common fees:
- Set Up Fee: You will more than likely be charged to set up a card, and the rate can vary from company to company
- Cash Withdrawal Fee: Most card charge a fee everytime you withdraw cash from an ATM
- Monthly Fee: this is standard fee for having an account and all cards have this
- Transaction Fee: Most cards charge a fee for transactions when you use your card, and it is usually a % of the overall sale
- Oversees Fee: There is commonly slightly higher charges for when you use your prepaid card overseas
Topping Up Your Card
Adding money to your card is not difficult to do, as nearly all cards allow direct deposit from bank accounts, and also cash top ups too. You can top up online and also over the phone also. In the UK you can use your local Postoffice and also PayPoint. In order to locate your nearest Postoffice to top up you can use this link: Post Office, and for Paypoint: Paypoint Locator. One thing to keep in mind is that the maximum limit your card has is suitable for your needs.
Another important point to consider is the daily spend limit that your prepaid card allows, as this can vary. A common daily limit is 1000 pounds, but some allow more and some less. Also the amount of cash withdrawal from ATM’s etc also varies, so ensure you get a card that will suit your requirements.
The better providers such as Bread, make it super easy to check you balance also, by providing text messaging services for free, so you can get your balance whenever you need it and also a free online service too. Companies such as Bread also allow employers to pay your wages straight onto your card too if you desire.
Limitations of Prepaid Credit Cards
Although Mastercard prepaid credit cards are fine to use in most situations, there is the odd time that you may run into a few problems. One of the most common issues that people face it when booking hotel rooms, as some companies decline the use of these cards, although this is becoming less of a problem.
The other situation is car rental, or similar purchases where the end total price is not known, and therefore the initial cost of the rental plus an extra 15-20% is often held, and not released for a few days, which essentially means you can’t access that money during that time.
Advantages of Mastercard Prepaid Credit Cards
You can shop online securely as you are protected by the credit card providers protection policy. They also offer a lot more convenience than a standard debit card as they tend to be accepted a lot more widely. Of course they are also safer than carrying cash around, and you don’t get charged interest on the money used.