O2 and NatWest fee free pre-paid Visa debit cards

In response to O2 and NatWest's launch of fee free pre-paid Visa debit cards, Louise Bond, personal finance expert at uSwitch.com, comments: "These fee free pre-paid cards have hit the market at exactly the right time in the economic downturn. The biggest problem is, they are only available to O2's 16.3 million customers and could be seen as a new business carrot, particularly for pay as you go users.

"Historically, pre-paid cards have been geared towards people with dubious credit records, who are unable to secure even a basic bank account. However, the fees and charges that are generally levied on these cards have always been hefty, particularly given that they are designed to help people in financial distress.

"Some pre-paid card providers charge consumers at every available opportunity. These charges include: up to £9.95 to take a card out, a monthly fee of around £4.99, a charge for making cash withdrawals of around £1.50 and, as if this weren't enough, they actually charge consumers up to 2.95% to load money onto the card. Even on a budget of just £200 a month, consumers will have to fork out as much as £141 a year just to spend money on some of these cards.

"Now it seems O2, the leading mobile provider, and Natwest are trying to appeal to a wider audience with the launch of the Cash Manager and the Load and Go, tapping into a whole new market. These fee free cards could be the perfect solution for people that either struggle to manage a monthly budget or just want to ring-fence their spending money away from the money spent on their mortgage and bills. Consumers cannot incur penalty fees or charges as they can only spend the balance of the card, and will be updated via their mobile every time the balance changes."