Why should I use a prepaid card?

If you don’t have a credit card or debit card, a prepaid card is an alternative that can sometimes allow you to buy things online or in shops – you can sometimes use them to withdraw cash back off of the card at an ATM too, although you will typically be charged a fee for this.

There are lots of reasons why people use prepaid cards including:

  • Personal privacy to keep certain purchases from showing on your bank statements.
  • Security concerns to put a fixed limit on how much can be spent on the card.
  • To bridge the gap while waiting for a new credit card or debit card to arrive in the post.
  • As a foreign currency card – sometimes with the option to add top-ups from back home.

Ultimately though, it comes down to not having a suitable payment card already, and opting for a prepaid card as a quick fix when you need to make a payment or purchase.

Prepaid cards are not problem-free – and are definitely not fee-free – and you will often end up paying charges to load money on to the card, to withdraw it from an ATM, and sometimes on purchases too.

All of this makes it important to decide whether getting a prepaid card is any easier or cheaper than running a secondary current account or even if you are new to the UK, using an account based overseas and paying the foreign exchange charges.

Is a prepaid card a debit card?

First of all, we need to know the difference between a credit card and a debit card. With a credit card, you buy things and then at the end of the month, you get a bill for the cost of everything you have bought.

With a debit card, the card is linked to your account and so as you go through the month, the value of the things you buy is taken out of your account – there’s no credit involved, and no bill to pay at the end of the month.

So is a debit card a prepaid card? In a sense it is, because you fund the account first, and then spend money from that positive balance using your card.

But when people talk about prepaid cards, they usually don’t mean a fully featured debit card with a bank account or online account linked to it – they mean a temporary payment card that you just top up with a fixed amount of money.

Importantly, prepaid cards might not be accepted widely, whereas debit cards tend to be issued by a major worldwide brand like Visa or MasterCard® and are accepted widely online, in shops and for ATM withdrawals.

Using prepaid cards abroad

One common use for prepaid cards is to buy things in a foreign currency – so for example, visitors who are new to the UK might get a prepaid card in GBP to avoid foreign exchange fees.

In some cases these cards can be topped up by friends and family back home by logging on to a website, but this might mean sharing your login and password with anyone who wants to send you money.

An alternative is to set up an instant online account with debit card like the Arro Personal Account, which comes with a MasterCard® debit card you can use to spend in pounds sterling.

Every Arro Personal Account has a UK sort code and account number suitable to receive international bank transfers – so rather than log on and top up your prepaid card, loved ones back home can transfer money to you just as they would to an ordinary bank account.

Am I eligible for an Arro Personal Account new to the UK?

Your nationality doesn’t affect your eligibility for an Arro Personal Account, as long as you currently live in the UK.

That means even if you are new to the UK, are here as a seasonal worker or are just visiting for any other reason, as long as you currently live at a UK address, are aged over 18 and pass our Fair Fit test, you should be eligible.

If you are, we guarantee to accept you for an account – and every account comes with a MasterCard® debit card you can use instead of prepaid currency cards.

You can apply online in under three minutes for an instant decision – and if we are able to approve you, we will send you your debit card details via SMS so you can start using the virtual card online until we can post a matching physical card to your UK address.