Good And Bad Pre-Paid Cards

Neil Faulkner investigates the best and worst pre-paid cards.

This article has already been emailed to Fools as part of our 'The Good, The Bad and The Ugly' campaign.

I'm going to trawl through an unspecified number of ugly prepaid cards, and reveal one hidden gem.

I once wrote an article called Six Great Tips For Getting A Personal Loan, but it had seven tips in it. I've now come across another of mine (A Prepaid Card That's Worth Getting) in which I say I'd compare five prepaid cards, but I actually compared six. It's getting embarrassing.

I'm going to share research now on some more prepaid cards. To avoid getting me sums wrong, I shall avoid doing any.

Table Comparing An Unspecified Number Of Prepaid Cards:

Note: I've got rid of those pesky 9's and 5's by rounding up charges from, say, £4.95 or 99p to £5 and £1.

*When making purchases or withdrawing cash overseas, don't forget that on top of charges you should consider the exchange rate you get. Also, ATM providers may charge you an extra fee.

In A Prepaid Card That's Worth Getting, I wrote about the one good card I had found, the Paypal Top Up Card. I explained who it was suitable for, and that it should be used for UK purchases only, not for cash withdrawals or overseas purchases, because that was too expensive. All the other cards I investigated were too expensive for everything: UK purchases, cash withdrawals or overseas purchases.

These new cards I've researched, in the above table, are pretty much the same as the last batch. The charges are simply far too high. However, one of these cards does stand out. Like the Paypal card, it could be a good buy if you use it for UK purchases only. That card is the last in my table: BabeBee Card.

According to the table, it should cost you £15 and then, if used properly, nothing more. Ordinarily I'd say that you've just wasted £15 when you can use a free debit or credit card, but this card has some benefits that will make it worthwhile for some people.

The BabeBee Card website claims that if you use the card to shop online at Asda and Sainsbury's you'll get a 5% discount, and if you shop online at Waitrose, Ocada or John Lewis you'll get an 8% discount. Not bad at all! Alternatively, you can buy gift cards and discount vouchers online at the reduced price and then shop in the stores directly. For that reason this card could well be worth it for many families. Just don't use it to withdraw money or make foreign purchases.

For other people, and for transactions at other stores, it's better to use a debit card. Even better, use a credit card that pays you cashback for every transaction. You could make hundreds in cashback each year by doing your shopping and big spending on it, but remember to pay off the balance each month or you'll pay more in debt interest than you receive in cashback.

If you're a member of Quidco or a similar cashback site it's possible you can earn extra cashback that way too, whether you're using a cashback credit card or a BabeBeeCard!

Compare credit cards at The Fool