Money News
Pre-paid cards are set to take a major slice of holidaymakers' annual spending on plastic this year as tourists bid to keep summer spending under control, Virgin Money believes.
The firm says worries about the soaring cost of living and rising debts will boost the popularity of the cards, which enable customers to spend overseas and withdraw money but not to run up debts.
Currently up to 40 pre-pay cards are available on the market with more providers expected to launch over the coming months. Virgin Money analysis shows average one-off application fees for the cards are £7.08 with some firms charging as much as £19.95. However customers also need to be aware of monthly fees.
Around 40% of providers charge a monthly fee to users ranging from £1 to £5.95 while customers also need to take into account fees on spending and overseas use when budgeting for holiday spending. Typically debit and credit cards charge handling and commission fees for overseas usage which can add up to as much as £5.95 for a £100 withdrawal.
Virgin Money spokesman Grant Bather said, "Everyone needs to keep their spending under control as the credit crunch and soaring inflation take a big bite out of household budgets.
"Pre-paid cards remove the temptation to run up debt while you're on holiday as you can only spend the amount that is loaded on your card. They're a good discipline to get into to avoid the risk of the sun going to your head and burning up your bank balance on holiday.
"And they can be more secure to carry than cash as if you lose the card you can get a replacement sent out. Plus if you really do lose control of your finances relatives or friends can load the card up with emergency cash."
09 July 2008 © Moneyextra.com
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