Prepayment cards, which do not require the holder to have a credit check or a bank account, are on the rise.



Prepayment cards, which are common in the US, are still something new to UK market, but an increasing number of card issuers are expected to offer them during the next year.



Existing offerings, like Mastercard's Cashplus, Cash2Go and the Amex Travellers Cheque Card have been joined by new players in the market – Speedcard, i-money and i-Travel card.

Follow up:

And Richard Mason, director of credit cards at price comparison website moneysupermaket.com, says the prepayment card concept is "not a bad one" provided consumers are aware of the "punitive" charges.


The cards are largely aimed at people who cannot get a bank account with a debit card, or those who do not qualify for a credit card, including low paid workers, teenagers and recent immigrants.


The charges vary per card, with two – Cashplus and Speedcard – charging a monthly subscription of £4.95 and £2.45 respectively.


All available cards charge for ATM withdrawal, both at home and abroad, with charges ranging from 85 pence for the i-Travel and i-Money card to £2 for the Cashplus card.


Some of the cards carrying a cash loading fee – essentially commission charged when you put cash on the card - and where applicable some carry a credit card loading fee.


Mr Mason said: "The concept of a prepay card is not a bad one if the charges are understood and if the card is used responsibly. For example, it takes the hassle out of carrying cash for those travelling abroad and for those who are either unable to or do not want to carry a credit or debit card, yet still want ATM access.


"It's also useful for those who don't want to exceed a certain budget – loading the card with a set amount will help prevent this."


Of the fees charged by the cards, he added: "Over a year, these fees can add up and consumers who want to go for the pre-payment option need to weigh up whether the charges justify the need for the card.


"One thing to note is that as more providers enter the pre-paid card market in the UK, there will be an increased amount of choice and competition. Consumers will soon be able to compare cards from a whole raft of providers and in the future and this competition will ultimately help drive down prices. Consumers will become better off as the UK prepayment card market matures further."