A prepaid card is like a normal debit card, but instead of being linked to your main bank account, it has its own balance. You load a chosen amount of money onto it first, then spend only what is available on your card.
It’s great way to budget your money and ensure you don’t fall into debt. But is it suitable for you? This blog walks through what you can and can’t do with a prepaid card to help you decide.
Table of Contents
- What Can You Do With a Prepaid Card?
- What Can’t You Do With a Prepaid Card?
- Is a Prepaid Card Right For you?
- How do I Get a Prepaid Card?
- Frequently Asked Questions
What Can You Do With a Prepaid Card?
Load Money Onto a Prepaid Card
To use a prepaid card, you must load money onto it. You can either move money via bank transfer or load cash onto your card at certain retailers and merchants like PayPoint or the Post Office.
Withdraw cash from ATMs
Prepaid cards work in much the same way as any standard debit card. You are issued a PIN which allows you to withdraw cash from ATMs. While many ATMs are free to withdraw from, some may charge a fee for withdrawals though no matter what kind of bank card you use. Many prepaid cards from fintech or challenger banks are an excellent option for people travelling abroad as some may not charge a fee for cash withdrawals in other countries and will allow you to access favourable exchange rates.
Pay for Goods and Services Online
People pay for many things online nowadays, from the weekly grocery shop to large electrical items. If you don’t have a bank account, you can still buy goods and services online with a prepaid debit card. Each card comes with a sort code and account number so you can pay for things through your phone or computer- easy!
Set up Direct Debits and Regular Payments
One of the advantages of a prepaid card for people who aren’t able to open a bank account is that they can use it to pay bills by setting up direct debits and other regular payments. All you need is the account number and sort code which is printed on the prepaid card.
You also need to make sure you have enough money loaded onto your card when these payments are due as prepaid cards do not come with an overdraft.
Have your Wages Paid onto a Prepaid Card
For those who may not qualify for a traditional bank account, a prepaid card can provide a practical way to receive wages electronically.
With fewer employers paying in cash, having an account to receive salary payments has become essential. But some people- like casual workers, freelancers, or those with limited credit history- may find it harder to open a standard current account.
A prepaid card can help bridge that gap. It allows wages to be paid directly onto the card without requiring an overdraft facility or credit check in the same way many traditional bank accounts do.
What Can’t You Do With a Prepaid Card?
Go Overdrawn
There may be a few exceptions, but one of the main features of a prepaid card is that you can only spend the money you have loaded onto it at any given time. This means that if you do not have enough money on your card when attempting to make a payment, the payment will be declined rather than allow you to go overdrawn. The absence of an overdraft is an advantage to people who are trying to stick to a budget.
Use it as a Credit Card
Just as a debit card, a prepaid card cannot be used as a credit card. However, while a debit card attached to a current account may allow you to pay for something even if you don’t have sufficient funds in your account (if you have an arranged overdraft), a prepaid card won’t as you can only access the money you have loaded onto it.
Build a Credit History Through Spending
Because prepaid cards do not involve borrowing, your spending activity typically does not contribute to building a credit score.
If improving your credit profile is your goal, you may need to explore other financial products specifically designed for credit building.
Deposit Cheques
Most prepaid cards do not allow you to deposit cheques directly onto the card in the same way a traditional current account might.
Funds usually need to be topped up via bank transfer, cash top-up services or other approved methods.
Is a Prepaid Card Right For you?
We’ve walked through what you can and can’t do with a prepaid card. But sometimes it’s difficult to truly understand without applying to real-life situations.
Follow this table to decide whether a prepaid card could be suitable for you:
How do I get a Prepaid Card?
Did you know that although Suits Me falls under the prepaid cards category, it is so much more than that?
A Suits Me account offers full array of banking-like features including setting up direct debits, standing orders, UK Transfers and money management tools such as an online account and mobile app. international transfers are also available via a partner in our app.
Open your Suits Me account today and get your Suits Me debit card in 3-5 working days.
Frequently Asked Questions
Is a prepaid card the same as a bank account?
Not exactly. While prepaid cards can offer many similar features such as receiving payments and paying bills, they are not traditional bank accounts and do not offer overdrafts or credit facilities.
Can I withdraw cash from a prepaid card?
Yes, most prepaid cards allow you to withdraw cash from ATMs using your PIN. Some ATMs may charge a fee, depending on the provider and location.
Can a prepaid card be used for recurring subscription payments?
Yes, you can use a prepaid card to set up recurring payments for things like streaming services, gym memberships, or software subscriptions. Just make sure your card always has sufficient funds loaded before the payment date, as unlike a bank account there is no overdraft to fall back on if the balance is too low.
Can I have more than one prepaid card at the same time?
Yes, there is nothing stopping you from holding multiple prepaid cards simultaneously. Some people find it useful to have separate cards for different purposes, such as one for bills and one for everyday spending. Just be mindful of any fees associated with each card so the costs don’t outweigh the benefits.
Is a prepaid card a good option for someone who is new to the UK?
Yes, prepaid cards are often one of the most accessible financial products for people who have recently arrived in the UK. Because there is no credit check and no requirement for an established financial history, they provide a practical way to manage money, receive wages, and pay bills while you settle in and work towards opening a traditional bank account if needed.
Can I use a prepaid card to pay someone else directly?
Yes, if your prepaid card account comes with a sort code and account number, you can make direct transfers to other people in the same way you would from a standard bank account. This makes prepaid cards a practical option for splitting bills, paying rent, or sending money to friends and family within the UK.
