The Online Consumer

Some people who have regular credit cards buy prepay cards anyway as they act as a discipline and can be great for one-off purchases you don't want on your bill... or don't want anybody seeing on your bill! – Sinead Ryan

Everyone’s flexible friend became a little more rigid during the recession. Some people found that their plastic proved too popular and instead of finding it handy just, for luxury purchases, started using it for everything from grocery shopping to paying the bills. When credit cards become your day-to-day spending choice, things have to change. The interest is extortionate — over 20pc p.a. in most cases, making every bill more expensive, if you can't afford to completely clear the balance.

Others though simply can't get approved for a credit card. Banks want to make sure you're not profligate or have a poor credit history, and may well say 'no' when you decide to apply. If you're in a low-paying job, unemployed, a student, or simply don't have a bank account, you might find it well nigh impossible to qualify for Visa or Mastercard, where minimum income requirements often apply.

One solution is the pre-pay money card. There are many on offer, and on the surface appear to do everything you want: some people who have regular credit cards buy these anyway as they act as a discipline and can be great for one-off purchases you don't want on your bill... or don't want anybody seeing on your bill!

Prepay cards are run through finance houses like Visa and Mastercard, however because they are not credit, there is no restriction to buying one — it's your own money being put on it and you can't spend more than you have. However, they do have the benefit of a CW2 code (the crucial numbers you're asked for on the back of a credit card), along with the 16-digit number and an expiry date which online sites demand. This is why they're particularly popular for internet purchases, but many also work equally well over the counter in stores anywhere there is a Visa or Mastercard symbol.

But why not just use a regular debit card? Well, it predisposes you to having a current account which often carries high transaction charges or monthly fees. You might prefer just paying as you go, rather than being charged for having cash in an account. Transactions don't appear on any statement and you cannot go overdrawn. You also avoid the annual government stamp duty, currently €30 although some cards will attract stamp duty of €5.

You buy the card as you would mobile phone call credit (or get it online in virtual or plastic form, depending on the supplier) for free or a charge, and top it up, for which there is usually a fee. Then you can shop away until the money is gone.

You can keep topping it up via your current account, text or app, or simply with cash at say, Payzone outlets, or just get a new one. They also work abroad and you can use them to withdraw cash at an ATM. It's a great way for parents (or grandparents) to give money to children travelling abroad (or, less likely, vice versa!), as all allow online top-ups.

Some suppliers charge a once-off fee, annual fee and/or top-up fees. All charge for ATM withdrawals and foreign exchange transactions. However, it's not all rosy. The charges can be hefty and you are paying for convenience, so it's worth knowing exactly what you're shelling out before you load up.

Another downside is that moneycards don't have the same protection as credit or debit cards; if you lose it, you're stuffed and if you use it to make a dodgy purchase, you can't claim via the 'chargeback' insurance on traditional bank cards.

Bonkers.ie's last comparison of three of the most popular prepays, 02, Skrill and Swirl for a purchase of €300, looked at costs including purchase and loading fees (some of which are once off);

Skrill came to €15.85, 02 Money was €14.49 while Swirl was €11.89. Subsequent purchases in all cases would be less.

In the case of 02 Money, the company has temporarily suspended new cards since the merger with Three although top ups are still available for their 80,000 existing users; they will be introducing a new branded money card product later this year.

But the Irish market leader is undoubtedly 3V with over 300,000 customers with foreign providers like Neteller gaining pace.

For specialist use, An Post has its own prepay card called PostFX on which you can pre-load sterling, US, Australian or Canadian dollars, commission free. It has chip and pin technology and any unused balance can be cashed in when you get home. It's not linked to your bank account, it's free to buy, but there are transaction charges and of course, currency charges. See anpost.ie for details. 

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