Prepaid Credit Card Market To Be Worth 45 billion By 2010
01 August 2008 / by Rachel Mason
If you are looking for the functionality of a credit card but want to avoid the risk of debt, then a prepaid credit card could be the answer, says leading online comparison site Fairinvestment.co.uk.
“A prepaid credit card offers a simple, effective and safe way of paying. You top up the card with money and then use it to pay for goods, safe in the knowledge that you can never go overdrawn or into debt,” explains Phil Alcock, credit card expert at Fairinvestment.co.uk.
“There are currently about 2.3 million prepaid credit card holders in the UK, and this figure is just set to keep on rising as people realise the benefits of a prepaid card – by 2010, the prepaid credit card market is estimated to be worth around £4billion with more than 7 million prepaid card holders*.”
Prepaid credit cards have generally been associated with people who have bad credit histories who have found it difficult to get a normal credit card; this is because they offer the same functionality as a credit card but without the risk.
Although prepaid credit cards still offer this valuable service, they are increasingly being used by people who could easily get a standard credit card but choose prepaid for their flexibility and convenience.
Prepaid credit cards are a good method of online payment, this is because the only money that is at risk is what is loaded onto the card. The Optimum Prepaid Master Card has been specifically aimed at people concerned about the security of online spending explains Anthony Graham, Marketing Director at 360money, the prepaid network behind Optimum.
“People are increasingly worried their banking details might fall into the wrong hands when they purchase online, and with good reason” he said, “Optimum allows people to enjoy all benefits of shopping online without having to fear of fraudsters accessing their banking details.”
Prepaid credit cards are also a very good budgeting tool – you can pick your limit, load it onto the card and that becomes your budget. It is for this reason that they have become very popular with parents who want to give their children financial independence but limit their spending power.
“Parents looking for a way to educate their children to be responsible with their money find that prepaid cards provide an excellent teaching method because they give the child the chance to be independent and even purchase goods online, but there is a strict budget in place. This can be handy for everyday life, or perhaps if a child is going on a school trip where they need cash,” said Mr Alcock.
Prepaid cards, which can be used all over the world, have also seen a hike in popularity as families begin to use them on holidays abroad to keep their holiday spending in check.
“Prepaid cards can be used just as a normal credit card, so on holiday, you can use the card to pay for meals out, activities, petrol for the hire car and to withdraw cash,” explained Mr Alcock.
“They can be topped up at designated retailers, online, in banks, via BACs and then spent in store, online, at cash points and anywhere in the world with the Maestro acceptance mark.
“With our free prepaid credit card comparison service you can compare the features of leading prepaid credit cards and then apply online for the one that best suits your needs,” said Mr Alcock.