A complete guide to prepaid cards – which is the best for you?

7 min Read Published: 28 Jun 2024

A prepaid card is an alternative to carrying around cash or using a debit card. It works in a similar way – and looks identical – to a debit card, except for the fact it isn't connected to a bank account. Instead, you load money on to the card and then use it for your day-to-day spending, topping it up when you need to. The way it works means there is no risk of overspending on the card, becoming overdrawn or building up any kind of debt. In this article, we will give you all of the details you need on how a prepaid card works, how to use one, how much they cost and whether it is the right spending option for you.

If you want specific information on prepaid travel money cards, head to our 'The best ways to take money abroad' page. If you are looking for the best prepaid cards for children, we have a guide on the 'Best bank accounts for children and teens'.

How does a prepaid card work?

Most prepaid cards can only be ordered online, though in the past it has been possible to purchase them from certain retailers or newsagents. At the point of purchase you will need to decide how much to load on it. Some cards also allow you to set up a direct debit from your bank account to automatically load money on to your card on a monthly basis. Different methods of topping up your card may have different limits. For example, you may be limited to adding £250 if you are doing it at a shop, but you may be able to do a bank transfer for over £1,000. Some providers will charge you to load over a certain amount or cap how much you can add to your card in a single month.

Using a prepaid card can reduce the risk of losing money through fraud, theft or loss. This is because the amount you stand to lose is limited to the total amount loaded on the card, which is not the case with a credit or debit card. For this reason, some people prefer using a prepaid card for certain online purchases or when spending money abroad. A prepaid card can also be preferable to cash as it is easier to travel with.

Where can you top up a prepaid card?

When your balance gets low, you can top up a prepaid card in a number of ways:

  • Online or over the phone
  • By bank transfer
  • At a Post Office or PayPoint store

Once money has been loaded onto the card, you can use it just as you would a debit or credit card. In fact, if it has a Mastercard or Visa logo, it should be accepted in all places that accept cards from those issuers. As with a debit card, you will have a PIN, which you use when making a payment or withdrawing cash from an ATM. There is usually also the option to make contactless payments and add the card to your phone's wallet.

If you try to pay for an item when you have insufficient funds on the card, the transaction will be declined. There is no overdraft or credit facility that would allow you to overspend on the card.

How much does a prepaid card cost?

Many prepaid cards have a fee or charge associated with them, so it pays to shop around and work out in advance what it is likely to cost. While one option may initially seem more appealing because there isn't a charge to take it out, it could cost more in the long run if there is a high transaction fee.

Not all cards have the same fees, but potential costs for a prepaid card can include:

  • A cost of £5 or £10 to buy the card (there are some free options available and other cards that waive the charge if you top the card up with a minimum initial amount)
  • A monthly fee for owning the card, which could be between £1 and £12.50
  • A fee of 2% to 3% to top up the card with money over a certain amount
  • A transaction fee of a percentage of each purchase
  • A cash machine withdrawal fee, both in the UK and abroad
  • Replacement fee if the card is lost of stolen
  • Inactivity fee if you haven't used your card for a certain period of time
  • Cancellation fee and fees to transfer any remaining money off of the card
  • Delivery fee to have a physical card sent to you

Which are the best prepaid cards?

Prepaid card Set-up fee Monthly fee UK transaction fee UK ATM withdrawal fee Charge to load money
Clubpay Pay+ No fee No fee No fee No fee No fee
CardOne Money No fee £12.50 No fee £1.50 No fee
Monese Simple £4.95 No fee No fee Up to £200 per month free (2% over £200) Up to £200 per month free (2% over £200)


Tesco Clubcard Pay+ Tesco Clubcard Pay+

  • Best for... those looking to manage their grocery shopping spend
  • Perks: As well as being fee free, you can earn Tesco Clubcard points at a rate of 1 point for every £1 spent in Tesco (doubled in first 100 days) and £8 spent in other places.
  • Extra information: You have to have an existing Tesco Clubcard to qualify

CardOne Money  CardOneMoney

  • Best for... those looking for good cashback deals
  • Perks: 3.5% cashback rewards with 35 high-street retailers, including Marks & Spencer, Argos and Boots
  • Extra information: £10 redemption fee to take money off the card if you close your account,

Monese card Monese Simple

  • Best for... those looking for a low-cost option and who are likely to stay within the spending limits
  • Perks: Additional credit-builder facility for £7.95 per month
  • Extra information: No redemption fee

Are prepaid cards safe?

Prepaid cards are considered to be a safe option for many users because they limit the risk of overspending and are also easier to manage than having to carry around the equivalent amount in cash. In addition, they are not directly linked to your bank account, which reduces the risk of fraud if your card details are stolen. Moreover, using a prepaid card doesn't appear on your credit file, so there is not the same risk of damage as there would be with a credit card.

On the other hand, there are two downsides to opting for a prepaid card in terms of safety:

  • You will not qualify for protection under section 75 of the Consumer Credit Act, which you would be if you made a purchase between £100 to £30,000 on a credit card
  • Most prepaid credit cards are not protected by the Financial Services Compensation Scheme (FSCS), though the Tesco Clubcard Pay+ is covered

Should you use a prepaid card?

Prepaid cards for travel

A prepaid currency card – also known as a travel money card – provides a convenient way to take money abroad if you’d rather not take cash or a debit or credit card. You can load the card with a set amount of money before you travel and use it in shops and restaurants at your destination. You can also use the card to withdraw cash from a cash machine.  

Prepaid travel cards are available in all of the major currencies and it is also possible to get multi-currency cards. Cards with the MasterCard or Visa logo are accepted by all retailers who accept payments from those payment networks.

Some general-use cards are also good options for use abroad. However, for details specifically on prepaid travel cards, read our article 'The best ways to take money abroad'.

Prepaid cards if you have poor credit history

A prepaid card can be a good option if you aren't eligible for a standard credit card but don't want the inconvenience of carrying around cash. As they are not a credit product, there is no need for a provider to access your credit file before taking out a prepaid card. Prepaid cards have the added benefit of limiting your spending to the amount you have loaded on to the card, which can be useful if you have a habit of overspending and running up debts.

While a standard prepaid card won't help you to improve your credit worthiness, there is the option with some cards to add on a credit-builder component. This service works by the card provider in effect lending you the equivalent of a year's worth of monthly fees and reporting to the main credit reference agencies when you make the repayment each month. If you pay the amount owed in full and on time each month, your credit rating will improve.

For more details on options for people with poor credit, read our article 'Credit-builder cards – which is the best credit card if I have poor credit'.

Prepaid cards for under-18s

There are a number of accounts designed for children that provide prepaid cards. These can be a good practical option as a parent can have control over limiting spending or putting more money into the account when necessary. If the child loses the card, there is also more chance they will be able to safeguard the money in the account rather than if they lose cash.

For our up-to-date recommendations for prepaid cards for children, read our article 'The best children's bank accounts'

The pros and cons of prepaid cards

Here is a summary of the key pros and cons of taking out and using a prepaid card rather than an alternative spending option.

The pros of prepaid cards

  • No credit checks: They are a good option for people who are not eligible for a credit card, such as those with poor credit histories, people who have just moved to the UK or young people without a credit history.
  • Managing spending: You cannot overspend on a prepaid card, so they are a good way of helping you budget and stopping you running up debt. They can also be a useful tool to give young people a way of spending money while a parent retains overall control.
  • Fraud protection: If your card is stolen or compromised online, you only stand to lose the amount that is loaded on to your card. There is also some hope you could recoup money that is lost or stolen.
  • Travel: Certain prepaid cards can help manage your spending abroad, without the risk of incurring unexpected foreign exchange charges. It is more convenient than cash and provides you with some protection if your card is lost of stolen.

What are the disadvantages of a prepaid card?

  • Lack of consumer protection: Unlike with a credit card, you won't have section 75 protection and a prepaid card is usually not covered by the Financial Services Compensation Scheme (FSCS).
  • Charges: Depending on the fee structure for the specific card you take out, it can work out relatively expensive.

Is a prepaid card right for you?

As you will likely have to pay some kind of fees and charges for a prepaid card, it arguably makes more sense to use a debit card for day-to-day spending. However, prepaid cards can be a great option in a number of specific situations, including for travel or as a way to budget. As with all financial products, it pays to shop around and to select the best option for your circumstances. You should also make sure you read through the small print before choosing a prepaid card to make sure there aren't any hidden charges or unexpected limits on the way you can use it.