Prepaid credit cards 'offer advantages'

Friday, February 26th 2010

Prepaid credit cards could prove to be a wise alternative to other forms of payment that result in debt.

The solution comes from the Debt Advice Foundation, which states that they may sometimes - but not always - be most appropriate.

Managing director of the body David Rodger said: "One of the main advantages of prepaid credit cards is that they avoid the accumulation of credit card debt by preventing the owner from spending more than they have loaded onto the card."

Although he added that consumers must always be sure of the possibilities before committing to any payment method, since prepaid cards can include administration and transaction fees.

But Mr Rodger explained that only allowing the owner of such a card to spend the money that they have loaded onto the device is one of its main attractions.

And the customer can still carry out tasks such as purchasing goods over the telephone.

His advice comes after insolvency trade body R3 called for a ban on allowing financially unqualified shop selling store cards.