Given the credit restraints brought about by the ongoing economic issues, the prepaid card has also acted to plug the gap where credit cards had often stepped in. Whilst there are no credit facilities offered with these products, the purchase security coupled with the lack of risk only helps to increase the appeal. Selected products also offer the opportunity to improve your credit whilst using their services; CreditBuilder offered by Cashplus does just this as does Credit Booster in conjunction with the Freedom prepaid card.
News coverage for the prepaid card has increased recently with Ryanair announcing that they will be applying a £5 charge for all means of online card payment, except for prepaid MasterCards (Cashplus, Freedom, Tuxedo, Virgin) and if you factor in that your spending money can also be stored securely on the card, you can look forward to a safe and affordable trip abroad in the near future.
O2 also hit the headlines when they became the first mobile phone network to venture into the UK finance market by offering their customers a new prepaid facility, supported by a vast TV advertising campaign – which can only have helped increase awareness of the existence of prepaid cards. Their card, in conjunction with Natwest, allows users to receive balance updates to their phone and also offers a facility geared to the younger generation to allow an element of control from parents as to the childs spending habits. It is however only available to existing customers thus offering a lure to join O2 over their many competitors.
Capitalising on an already market leading balance transfer rate on their main credit card, Virgin also offer a prepaid facility. At face value the concept is similar to most of their competition; however the connection to the Virgin brand allows customers incentives such as discount on Virgin holiday packages as well as special offers with Virgin Media. Virgin charges a small fee to purchase the card but alongside their credit card offering can cater to most needs of a customer, regardless of credit status.
As more and more companies look to move into this sector, the need for customer friendly cards is increasing and as such more incentives to use the card are coming into operation. Cards such as Cashplus plus offer up to 27% when purchasing from selected partners using your card and not only this, but they also off full purchase protection for free the only prepaid card to currently do this.
The next step in the evolution of prepaid cards comes with the introduction of a banking product. With the card already seen as the strongest and often only option for those who cannot obtain a bank account, now you can be provided with an option to get back onto the financial ladder with less risk as you can never spend more than you have. The theory is that utilisation of such a card will improve peoples ability to budget and as such in the years to come find it much easier to access main stream finance products.
In 2009 hundreds of millions of pounds were loaded onto thousands of prepaid cards in the UK and so it is a fair assumption that they are here to stay.
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