As of September 2019, there were an estimated 97 million debit cards in circulation across the length and breadth of the UK. While 84 million of these were contactless, a growing number of people also took out a prepaid debit card from a reputable provider.
Prepaid debit cards essentially require you to transfer a fixed (and usually capped) sum of money from your bank account, with this process typically managed with a direct debit. This money is then spent in accordance with a predetermined budget, while you can ‘reload’ and choose to add the same amount of cash every single week or month.
But why are prepaid debit cards on the rise, and what are the advantages of using this type of payment method? Let’s find out!
The Dangers of Overspending With a Normal Debit Card
While it isn’t really possible to spend more money than you have with a standard debit card, you can easily spend outside of your realistic means thanks to the fundamental lack of controls in place.
In total, there were around 1.9 billion debit card transactions carried out by UK citizens both at home and overseas in August, with this number 20.5% higher than August 2020 and 24.7% more than the previous year.
Overall, the total spend in August 2021 was 17.5% higher than in 2019, with this number continuing to rise markedly despite the socio-economic impact of the coronavirus and associated lockdown measures.
What are the Advantages of Prepaid Debit Cards?
Ok, we hear you ask, but what exactly are the main benefits of prepaid debit cards? Here are a select few to keep in mind:
- #1. They’re Highly Accessible: This is an important point, as prepaid debit cards are incredibly accessible and available even to individuals with less than ideal credit scores. With certain providers, who can access your free contactless and prepaid MasterCard in less than 10 minutes, without the need for an independent credit check or providing proof of your address. This is great news for applicants, even in a country that doesn’t have a large unbanked population.
- #2. They’re Great for Budgeting: As we’ve already touched on, prepaid debit cards are ideal from the perspective of budgeting, as they only allow you to spend as much money as you choose to load onto them. You can also set limits and avoid going overdrawn at any point in time, making it far easier to manage your money, minimise debt and ultimately eliminate the risk of spending outside of your means (so long as you use it responsibly).
- #3. They’re Secure: On a final note, we should recognise that independent prepaid debit cards are highly secure and much safer than carrying or using cash. The money loaded onto your card is also protected by a personal and unique pin, while you can quickly block your card through a dedicated app in instances where it’s lost or presumed stolen.
