Having trouble getting a credit card? Or want your kids to benefit from having a widely accepted payment card but worried about them running up debts?
A prepaid 'credit' card could be the answer. It’s like a credit card without the credit. You load money onto the card then use it as you would a normal credit card. But when the money runs out the card stops working, preventing you from spending what you don’t have.
However, while a neat idea for some, many prepaid cards have fairly hefty charges, often when you load money onto the card and/or when you spend it, diminishing their appeal. So it’s good to see O2 bucking the trend with prepaid Visa cards that don’t charge for anything except overseas transactions which cost 2.75% of the amount spent (using Visa’s exchange rate).
O2 has two prepaid cards, available only to their mobile phone customers, with the 'Load & Go' most suited for those without a bank account and parents wanting a card for their children. The card, run by Natwest, is available to those aged 13 and over.
You can load from £5 to £100 per day at O2 shops, PayPoints (newsagents, convenience stores etc.) and e-pay, subject to an annual limit of £1,800. Cash machine withdrawals are limited to £200 per day, but should be free from most banks and building societies, and the most you can spend in a day is £720.
You can use the O2 prepaid card pretty much anywhere Visa’s accepted, the main exceptions being for reservations and deposits (e.g. car hire) and paying for petrol at the pump.
If your card is lost or stolen you should inform O2 immediately, as you’ll be liable for any losses up to £50 until you do.
Reading through the terms and conditions there really don’t seem to be any hidden charges, but bear in mind that any balance on the card is not covered by the Financial Services Compensation Scheme. So if Natwest were to become insolvent or go out of business you’d lose any cash balance loaded your card.
Unlike credit cards your purchases are not protected (by section 75 of the 1974 Consumer Credit Act) so you would, for example, be left high and dry if you buy a £250 laptop over the web and the retailer goes bust before it’s delivered.
Overall this is a great deal for those wanting a prepaid card, but it’s a shame only O2 mobile customers can benefit.