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Guide to using a prepaid card as a bank account

Prepaid cards are an alternative payment method to credit and debit cards. Rather than being linked to a credit or bank account, they must be ‘topped up’ with cash to be used.

While these cards have their uses for a wide variety of people, they are of particular value to those who do not bank. According to the latest research, there are around 2.5 billion adults in the world with no access or limited access to a bank account.

Two people on computers reading about prepaid bank accounts

In the modern day, this lack of banking facilities can have a huge impact on quality of life as it can restrict a person’s ability to make purchases with a debit card, pay for bills by direct debit, manage their finances effectively, and even receive their wages.

Prepaid cards are one innovative solution, as they can provide the basic banking facilities – or a way around them - that everyone should be entitled to. As such, almost one in four (24%) use prepaid cards because they have no other payment or banking options, according to the 2013 Financial Literacy Report.

This guide will provide detailed information on how to get a prepaid card, how much they cost, and how they can be used as an alternative to a traditional bank account.

Getting a prepaid bank account

As more people realise the benefits of prepaid cards, they are becoming easier to get hold of. These can now be found online from a huge number of providers; at any PayPoint, from the Post Office, and more.

There are many different types of prepaid cards, so it is important to compare the features and fees to ensure that the chosen one meets your needs, especially if it is being used as a bank account.

Topping up a prepaid bank account

Prepaid cards work in a similar way to pay-as-you-go mobile phones in that they have to be topped up before they can be used. While debit cards have to be linked to a bank account and credit cards to a credit facility, prepaid cards are just that, prepaid.

There are a number of ways to top up a prepaid card, but depending on the provider, some methods do incur a charge, so it’s worth finding out which method is the most cost-efficient.


There are 26,700 Pay Point terminals in newsagents, off licences, supermarkets, and petrol stations, up and down the UK, so topping up in this way is quite convenient. Simply take cash and the prepaid card to any PayPoint to load the funds.


Most prepaid cards have a top up facility on the provider’s website, but in order to reload in this way, you will need a credit or debit card, which might not be possible if you do not bank with anyone, therefore undermining the need for a pre-paid card.

Direct Transfer

One of the big differences between prepaid cards and other payment methods is the fees charged for using them. Prepaid cards tend to charge for every day transactions, from the reload fees mentioned above to monthly fees, set up fees and cash withdrawal fees. If you know how you plan to use the card, you can find the one that not only meets your needs, but also won’t cost a lot of money to use as a bank account alternative.

Prepaid banking statements

A prepaid card is slightly different, as it doesn’t provide a statement as such. However, most cards do have an associated online account where users can see their income and expenditure and manage their finances.

Bank accounts used to provide account holders with monthly statements through the post – and many still do. For paperless billing customers, they will receive a monthly statement via email, but can also see their statement online at any point.

Building credit rating with prepaid banking

For the millions without a bank account in the UK, the main barrier to traditional banking facilities is credit rating. People with histories of missed or late payments, CCJs and bankruptcy face being excluded. However, prepaid cards provide access to these essential facilities, and some can even improve credit ratings. Credit builder prepaid cards work by ‘loaning’ a set amount to the account holder, which is then repayable as the monthly fee. Provided the card has sufficient funds for the fee to be taken every month, users should see an improvement to their rating after one year. While prepaid cards can be used by anyone, they are an excellent alternative to a bank account for people that are unable to access one by traditional means. They enable users to receive wages, pay bills, pay for things online, and manage their finances.

Two people on computers reading about prepaid bank accounts