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Are prepaid credit cards the answer for those with financial problems?

As more and more people in the UK are refused traditional credit such as credit cards, overdrafts and loans we have seen the introduction of a new service, i.e. the prepaid credit card. This is a facility available to the vast majority of the UK population, even those with historic bad debts, and allows you to preload your credit card with funds before you spend. This allows those with credit problems to maintain the flexibility of a debit card or credit card for use online or over the phone. So what is the downside?

The downside of these particular cards is the fees which are charged on an annual basis and the percentage of any deposit which is taken by the credit card provider. However, ultimately 99% of customers who have a prepaid credit card are unable to obtain credit elsewhere which means that their hands are very much tied. The risk to the credit card company is zero and the risk to the consumer is zero which should instigate a win-win situation - but compared to more traditional credit card facilities the consumer is paying over the odds.

Unfortunately these payments and charges are the price which many pay for losing control of their finances although hopefully this should not last forever.

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