15.1.13

Wasting all our money on plastic

We all know that credit is useful but not ideal. We all know that a credit card company is making money by letting us spend money we don't have, in advance. We know that we should pay it back to avoid high charges etc etc

But what about a newer plastic scourge? 

When I was young (and dinosaurs roamed the earth etc) 

Gratuitous Dinosaur pic ( Copyright (c) 123RF Stock Photos )

There were vouchers and gift certificates - they were slips of paper - maybe in a card that were just like money but could only be spent in a certain store, there was no cash back option, you spent it all in one go and you lost any 'change'. This worked fine for years - stores had a way of guaranteeing your money would be spent in store and usually more than you'd been given, as you were more likely to 'top up' a little over the limit than lose 50p if you spent under. People enjoyed the ability to give a gift where someone could choose what they liked....

I know you all know all this

But these evolved and now they are plastic cards, the benefit is that you can top them up with HUGE amounts of money (not just a fiver) and then spend over time, leaving the balance on the card. Sounds idyllic. (Unless it's a Jessops Voucher or an HMV one obviously). 

But these cards too have evolved. You can now buy prepaid Visa cards or American Express cards so that the lucky recipient can spend their new dosh anywhere they like! It's like money...but with one subtle difference...

If I give you a tenner, (I'm not going to before you ask) and you put it in your sock drawer, saved for 'a rainy day' while the government and inflation will do their level best, in a years time it will still be a tenner, ready to spend...



Not so the Visa or American Express prepaid card (and actually there are even more than those two) , no not because they expire, a reason much more insidious....you are paying to own them, but not just a small amount.

Some charge a rather awesome £9.95 to buy the card, £4.75 a month to own the card and £1.50 to use an ATM.

Don't take my word for it - there are comparisons here http://www.money.co.uk/prepaid-cards.htm

Now maybe I'm missing something hugely obvious, but if you have to pay up front (ie it's not credit) why not just use or give the cash? Are these cards just for people with no bank account? Is is possible to have no bank account??  And if so surely it's a huge rip off targeting (once again) the poorer members of society.



Are there still places that won't take cash (apart from the Olympics) and if so it seems cheaper to ask a mate to buy for you and give them the cash!

It's a similar story with 'Pocket money' cards. PKTMY seems like a good idea but only if you don't trust your child with cash (in which case why give it to them?) I don't feel the need to tell my child what she can and can't spend her money on, and if she needs a plastic card she can open a bank account. If I use a pocket money card I'll be paying someone else so that I can give her money and I'd rather she had what little I have to give, to be honest!

" The service is not free to use. There is a joining fee of £5 a family, a monthly membership fee of £1 a child, and a cash machine withdrawal fee of 50p in the UK and £2 overseas."



So to sum up - I think that prepaid plastic is a silly choice. Aimed at the poor or the gullible. Give your child a fiver, they may surprise you with their maturity, they may even open a bank account! (and some banks like the Co-op donate to a charity and give them gifts too!) And they may not - they may just spend it, but then, after all, it's their money.





This ranty post is obviously not sponsored :-)

all photos are Copyright (c) 123RF Stock Photos  and aren't they beautiful!