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Why I Don't Like Prepaid Cash Cards

Report by Jane Mack

Next month sees the launch of the new pre-paid payment card known as the Cashplus MasterCard. Personally, I don't like the look of it much.

The main reason is that it's aimed at the 8 million people without bank accounts and credit cards - usually the poorest members of society - and the charges are high.

In theory, the idea's a good one - it's certainly taken off in America where they've proved very popular. The card works like a pre-paid mobile phone card and because it's prepaid, you can't go overdrawn as only transactions up to the amount prepaid will be approved. You can use it wherever you can use a Mastercard and you can top it up by between £10 and £5,000 a time.

Cashplus makes much of the fact that there are no interest charges and no late payment fees but as you're not actually borrowing any money, that's surely self-evident, as is the fact that no credit check will be required.

The key thing is the fees as you can see from the table below:

Action  Fee 

Card Issue/Replacement card  £9.95 

Subscription costs  £4.95 per month 

ATM Withdrawal per transaction  (UK) £2.00

(Outside UK) £3.00

Cash Advance (at bank)  £3.00 

Cancellation fee  £10.00 

Top Up fee by debit card  £2.00 

Foreign Transaction fee  2.75% of amount withdrawn/spent 

Speaking with Customer Services  50p per minute 

The only aspects of holding the card that are free are being able to change your PIN and check your balance. Every other action costs money and I can't really see people being enticed by it especially when, for the most part, they can use cash.

People who don't currently enjoy the flexibility of paying by plastic would be much better off considering a basic bank account. They're very simple accounts that don't involve cheque books or the risk of going overdrawn by mistake and fewer credit checks are required.

But you can pay money in, get cash out by card and use the account to pay bills directly. Most importantly, you can only spend money if there is enough in the account as basic bank accounts usually don't let you go overdrawn by more than £10, if at all.    http://www.sky.com/skynews/xml/article/0,,...5672000,00.html       

I knew there were going to be charges, but I never realised that there would be that many. I wonder how clear they'll make it in the adverts? Not very, I suppose :rolleyes:

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As the customer isn't taking on any debt, they aren't protected by all the laws... i.e. if the company you ordered something from went bust!

Correct me if i'm wrong here... Dave down pub told me this.

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  • 301 Brexit, House prices and Summer 2020

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