Some of the traps that need to be sidestepped are the charges. Annual charges can range from nothing up to £29.99 a year. At face value £29.99 looks expensive, until you compare it to a card with no annual charge but a monthly one instead of £9.99, which is the equivalent of £119.88 per annum.

Withdrawing cash from an ATM can cost up to £3 per visit.

The sort of spender that visits lots of shops for small transactions could fall foul of an additional 99p per transaction, whilst regular top-ups can incur up to 4% charges per top-up.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:

“The type of spender you are should dictate which card would better suit you.

“These cards are designed for everyday use just like a debit card. So money should not be stored on them unused for any length of time.

“If you get cash via the ATM, avoid getting just enough for one night out, as it would be cheaper to get cash for the week and pay one fee.

“If you think you will frequently use the card to make small purchases, look for a card that does not charge you to do this.

“Despite the charging structures, prepaid cards can be cheaper than an unauthorised overdraft and have the added incentive of no bills for unpleasant letters from the bank manager or bank overdraft charges.

“These cards are not for everyone; if you have a debit card and rarely go overdrawn, then this card may not be for you. However, anyone who struggles to stay within their credit limit, and makes an educated choice of which card best suits them, can find prepaid cards a credible alternative way to spend.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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