The Sunday Times: Prepaid credit card funds are safe

11
Jun/090

The Sunday Times: Prepaid credit card funds are safe

Although not being covered by the watchdog’s own deposit compensation schemes, the Financial Services Authority (FSA) has strict regulations which mean that any concerns over the safety of funds held on prepaid credit cards are safe.

Prepaid credit cards are likely to prove popular among consumers using their credit cards abroad and looking to save money this summer.

This is because the cards - which are pre-loaded from the holder’s bank account - are subject to lower overseas usage fees and charges than other kinds of credit cards.

However, funds loaded onto popular FairFX and Caxton FX cards by customers are not held by the firms themselves, but are instead passed on to accounts at the Newcastle building society.

Having said all of this, customers are not directly protected by the Financial Services Compensation Scheme (FSCS) in the same way a bank account would be. This guarantee covers consumer for up to £50,000.

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