How much are the fees for Prepaid Debit Cards?
Unlike credit cards, prepaid debit cards usually require a small initial payment to sign up to the card, and then there are small fees added for transactions using the card.
Why do I have to pay to get a Prepaid Debit Card?
With credit cards, they are usually free to sign up to, and free for transactions (apart from taking money out of a cash machine). However, these are only free because you are borrowing money from the card provider, and therefore they can charge your interest at rate as low as 5%, all the way up to 35% or more!
For example, if put £250 on a credit card with a 20% interest rate, you would be paying roughly £50 in interest (other factors such as the length of time before the money is paid back affect the actual amount of interest). With the credit card companies making huge amounts in interest, they can afford to give you a free card with no cost for transactions, and still make large profits!
With a Prepaid Debit Card or Prepaid Credit Card, you have to top up your card before you can use it for purchases. Because you are spending your own money, rather than borrowing from the card company, there are no interest charges to pay. As a result, in order to pay for the service, the debit card provider charges you a small amount to sign up for a card, and then small amounts for making transactions or for topping up your card for example.
However, even though you may pay per transaction for example, it can still work out to be cheaper than the interest charged by credit card providers!
What do I actually have to pay for with Prepaid Debit Cards?
There are a number of different fees for Prepaid Debit Cards, and the amounts and type of fees vary between the card providers. On each of the card providers pages on this site all the major fees are listed, but you should also have a look at the Terms and Conditions for each card, which shows a list of all charges for the card. Again, these are linked to at the bottom of each debit card providers page on this site.
By studying the various fees, and thinking about how you are going to use the card, ie how many transactions you will make in a month, whether you will make one large top up or many smaller top ups, you can work out which card will offer you the best value for money!
The most common fees are listed below:
Signing up for a Prepaid Debit Card or Prepaid Debit Card
All card providers charge for signing up for a pre paid debit card or pre paid mastercard®, to cover the administration costs and cost of actually producting the card.
The amount of the charge varies between card providers however, and normally ranges between £5 - £10.
Monthly / Yearly Account Management Fees
Most prepaid debit card providers do not charge account management fees, although some do so it's something that needs to be checked. Prepaid mastercards® usually do charge account management fees.
These fees are usually around £4.95, monthly for some prepaid credit card providers or yearly for credit card providers.
Transaction Fees
Some prepaid debit cards and prepaid mastercards charge fees for each transaction. These are usually around 2.5%, meaning that if you spent £100 on your card you would be charged £2.50. Many debit card providers give free transactions, so it pays to look at a number of different cards to find the one thats right for you.
Top Up Fees
Some prepaid debit card providers charge fees to top up your card, and these fees vary depending on the method used to top up your card. They can range from a flat fee for example 25p for payment by bank transfer or debit card to £1 for PayPoint top ups, or as a percentage of the top up, such as 3%, costing you £1.50 for a £50 top up for example.
ATM Withdrawal Fee / Cashback Fee
All prepaid debit card providers and prepaid mastercard providers charge a fee for withdrawing money from a cash machine, and sometimes using the cashback scheme at participating retailers. The amount is usually between £1.00 - £1.50 per transaction.
Foreign Transaction Fees
All prepaid debit card providers and prepaid credit card providers charge fees for transactions abroad. There is usually a fee of £1.99 - £2.99 for withdrawing money from an ATM abroad.
There is also a charge for transactions abroad, which range from 2% - 3% of the transaction value, so if you paid for something costing £50 abroad, the fee would be £1.25 based on a rate of 2.5%.
Forgotton Pin Reissue Fees
Although some prepaid debit card providers re issue your pin number for free if you forget it, some charge around £1 to get a new pin number sent to you.
Check the Terms and Conditions for other Fees
All of the standard fees are covered on this page, but there may be extra fees depending on your prepaid maestro® card provider.
Make sure that before you sign up for your card that you have read the card providers Terms and Condition, as there may be some fees unique to that particular provider.
On each of the card providers pages on this site, there is a link at the bottom to the Terms and Conditions page for that particular card.
Think Smart and Save Money!
Before you sign up to a card, you need to think about how you will be using the card, so that you can pick the card that suits you best. You can then study the card providers fees to estimate how much you would be charged in a typical month.
It makes sense to group transactions together, as this can save you money! For example, rather than taking out £10 a day each working day, take out £50 at the start of the week instead, saving you £5 or more!
The same applies for topping up, rather than topping up weekly, you could top up 4 weeks money at the start of the month, saving you another £4 or more!
Look carefully at the card fees, and how they relate to your spending. For example, a card could cost more to sign up for than the others, but they have more transactions that they don't charge for, so this would actually save you money!