Prepaid credit cards help with budgeting

Prepaid credit cards are being used by consumers for budgeting, according to Chris Reddish, chairman of the Prepaid International Forum.

Cardholders load a certain amount of money onto the cards and no more than this amount can ever be spent -- meaning there is no risk of falling into debt.

However, Mr Reddish said that he had seen some consumers go one step further and actually use the cards to control their finances.

"In one of our focus groups, we actually have a young lady who has decided to use her prepaid card as a budgeting tool," he explained.

"So she actually was putting on clothing, spending and fun money onto her card, so it helped her [to] control [her] spending and she could only spend what she'd saved."

On top of the budgeting benefit, Mr Reddish said that prepaid credit cards offer extra security for consumers.

Holders can block and unblock the card via a text message from their mobile phone, so they can make sure it is only usable while they make a transaction.