Bankrupt? Prepaid Cards may be the answer

Published on 13 July 2012 by Raffick Marday

What is Bankruptcy?

Bankruptcy is one way of dealing with debts you cannot pay. The bankruptcy proceedings:

  • Free you from overwhelming debts so you can make a fresh start, subject to some restrictions;
  • Make sure your assets are shared out fairly among your creditors.

Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.

Can I get a bank account is I am bankrupt?

Yes but not all banks there are currently 3 banks that state that they will provide basic bank accounts to undischarged bankrupts. Nationwide Building Society The Co-Operative Bank, and Barclays Bank all state that only a ‘record of fraud’ should prevent an individual obtaining access to their basic bank account facilities

Do I have an alternative to a bank account?

Yes you can get a prepaid card, they are a virtual bank account, there are no credit checks, no proof of income and can be used like a normal bank account, even if you are bankrupt you can still get one. With a prepaid card you can even set up standing orders, withdraw your cash from atm’s, use at retail outlets over the phone or online. You can choose either a Prepaid MasterCard, Prepaid Maestro or Prepaid Visa card.

Can I get a credit card if I am bankrupt?

You cannot get a credit card if you are bankrupt , this is because you have a bad credit history, and once you are discharged you can then apply for a bankrupt credit card or credit cards.

What are the benefits?

Unfortunately bad debt is on the increase, banks are increasing charges and loan companies are making it easier to get credit, how does that affect you, if you cant keep up the minimum payments chances are you are going to get in to debt. Prepaid cards are now a serious alternative, all their charges are clearly laid out usually in the terms and conditions and companies are now.

Way up what is best for your situation

  • Cost of card – these vary depending on what your card can do and if it is a Maestro or MasterCard Maestro cards are cheaper but MasterCard has more capabilities
  • Card Activation fees – some cards mainly “cost per transaction” charge an annual fee
  • Annual charges – some cards mainly “cost per transaction” charge an annual fee
  • Monthly fees – these are ideal if you know you are going to use your card on a regular basis it can help you budget more easily
  • Cost per transaction – if you are only going to use your card every now and again then this plan will suit you, but be careful as this can add up to more than a monthly fee
  • Withdrawing cash – (ATM’s) – If you are just going to take cash from cash machines look at the charges and see who is offering the lowest fees
  • Wages payments – Free with nearly all the prepaid MasterCard’s
  • Direct debits – you cannot do direct debts on prepaid cards as the amount is variable and this can cause you to have insufficient funds if they take more than expected
  • Standing orders – you can with some of the MasterCard brands, you phone up the customer service line and they will send you a form
  • Re loading charges – Think about the way you can top up, online is usually free, some companies charge over the phone, look at standing orders normally free, and nearest location there is no point if the nearest post office is miles away
  • Benefits – all the MasterCard brands offer discounts on car hire, hotels and flights to USA, some prepaid cards like bread prepaid card offer hundreds of discounts when you pay with your card.

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