Any business accrues expenses, whether domestically or overseas, and managing these expenses plays a significant role in your end-of-year profit and loss. One way to control outgoings is to use prepaid expense cards rather than a traditional business credit card.
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7 best prepaid expense cards
Let’s compare the seven biggest options in the market to decide which cards will suit your business needs best:
| Card name | Monthly fee | UK transaction fee | UK ATM fee | Overseas transaction fee | Overseas ATM fee |
|---|---|---|---|---|---|
| Acorn Business Account | £12.50 | £0 | £1.50 | £2.75 | £3 |
| ANNA Money | £0 | £0 | £1 | £5 + 1% | £1 |
| Card One | £12.50 | £0 | £1.50 | 2.75% | £3 |
| Cashplus Business Go | £0 | £0 | £2 | 2.99% | £3 |
| Equals Spend Card | £0 | £0 | £1.50 | £0 | £1.50 |
| Pleo Prepaid | £6 | £0 | £4 | 2.49% | £4 |
| Soldo Pro | £6 | £0 | £2 | 1% | £2 |
These numbers relate to the most basic prepaid expense cards these suppliers offer. Many offer more advanced accounts, with benefits that include cashback and overdraft facilities, but you’ll need to pay higher monthly and upfront fees to access such perks.
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Only you know which of these cards, and their associated features, will meet your business needs best. Investigate all the options and make an educated decision based on all available factors.
What is a prepaid expense card?
A prepaid expense card is essentially a pay-as-you-go credit card. When purchased, a prepaid expense card will have a balance of zero. You can then add money to the card and assign it to your team members, providing them with spending power for an expense account or while travelling – without worrying about overspending, theft, or abuse of the account.
Will I need to pay for a prepaid expense card?
Yes, you will need to pay an upfront fee for a prepaid expense card and discounted rates for any additional cards and accounts. Depending on the card supplier, this upfront charge could be anywhere from £10 to £60. Some prepaid cards also charge a monthly fee to keep the account open.
How do prepaid cards work?
On paper, prepaid expense cards work the same way as a business credit card. The cardholder can pay for goods and services anywhere that accepts card transactions, offline or over the internet. A prepaid expense card will be assigned a PIN, though most will also have contactless functionality.
As long as spending does not exceed the balance of the prepaid expense card, the transaction will complete as normal. The cardholder will be able to view the balance using an ATM or by checking the card’s profile online.
How much money can I load into a prepaid expense card?
This depends on the card. Some will allow unlimited spending, while others issue daily, weekly, and monthly caps on transactions and balances. Check the small print of any prepaid expense card you purchase, ensuring it will not leave the holder short of money.
Can employee expense cards be used overseas?
Yes, the vast majority of prepaid expense cards can be used overseas. The transaction will be completed in the local currency, then converted to £GBP according to an exchange rate set by the card supplier.
| Important note on exchange rates |
|---|
| Be aware that this exchange rate may not match what you were expecting, and there will invariably be a charge to use a British-issued prepaid expense card in any foreign territory. |
Do prepaid expense cards have an expiry date?
Yes, prepaid expense cards will have an expiration date, just like a business credit card. Online purchases will require an expiration date to be entered, along with a security code, to ensure the card is in the hands of the individual attempting the transaction. Prepaid expense cards often have an expiration date of 36 months.
Check the terms of service when ordering a prepaid expense card to learn what happens to unused funds upon expiration. Most reputable suppliers will allow you to transfer a balance to a replacement card, but check if this is the case and you will not lose out.
Do I need a physical prepaid expense card or can I use an app?
In the age of the smartphone, the idea of carrying a credit card can feel outdated and insecure. If you prefer, you can sign up for a digital prepaid expense card, accessed through an app or by adding the card to Apple Pay, Google Pay, or an equivalent. Naturally, going digital also means that your prepaid expense card can be used almost immediately – there will be no waiting for a card to arrive in the post.
Why choose a prepaid expense card over a business credit card?
There are five compelling reasons to choose a prepaid expense card over a business credit card for your travelling staff.
| Benefit | Good to know… |
|---|---|
| Convenience for staff | Some staff members may not be in a position to pay for business expenses and claim them back at a later date, or resent doing so. A prepaid expense card means no out-of-pocket costs for your team. |
| Reduced administration | Expense claims are an administrative headache for the person filling in the claim and the accounts department that must check and approve every line. A prepaid expense card removes this labour. |
| Controlled spending | If you assign a per diem to employees for expenses while travelling, you must trust them to stick to this amount. If you’re keen to avoid a “spend first, ask for forgiveness later” situation, a prepaid expense card limits spending power. |
| Security | If a business credit card is lost, stolen, or cloned, your company could be liable for thousands of pounds in unauthorised expenses that need to be reclaimed as fraudulent. Losing a prepaid expense card will only cost you the balance on the card. |
| No credit needed | If you’re a small business or a start-up, your company may not have established a credit profile. This can make it tough to gain a business credit card with an appealing APR. A prepaid expense card has no such concerns. |
Will prepaid business cards affect my business’s credit score?
No, using a prepaid expense card will not change your company’s credit score, for good or ill. As you will be loading up the card in advance, there is no credit arrangement, so no checks will be necessary.
Equally, a basic prepaid card does not have any overdraft facility, so a user can’t overspend and damage the creditworthiness of your business. If a user attempts to spend more than the balance remaining on a prepaid card, the transaction will be declined.