Many don’t realise costs of using prepaid cards

According to a recent report many low income consumers in some of the poorest areas of the country are having benefits paid onto prepaid cards, but fail to realise the high costs that can be involved in doing this. Concern has been expressed by officials from the Department for Work and Pensions over the lack of awareness amongst consumers when it comes to the charges involved in using prepaid cards for such purposes.

The DWP is said to have circulated an internal email outlining its concerns over this matter, and according to reports one benefits office has received requests to pay almost one hundred people their benefits on to these prepaid cards. These then incur charges, but the card providers have defended the cards stating that they promote financial inclusion.

Staff members at the benefits office in question contacted the customers who had made the requests for the benefits to be paid directly onto the cards, and found that in the majority of cases customers had been unaware of the charges that would be involved.

One of the companies that were involved in sending the requests had sent forty six applications asking for benefits to be paid onto the Go: Card. Officials from the firm said that they had obtained the forms through marketing in the local area on a face to face basis with consumers. The DWP raised concerns over the practices being used by the company to persuade claimants to have their benefits paid onto the cards, and since then the firm is said to have reviewed its sales practices.

Defending the card an official from Go Money Solutions stated: “We offer our customers the chance to take part in fully utilising the internet’s many advantages in purchasing goods and services at considerably discounted prices and convenience. We do not charge for this facility. All customers are provided with a copy of the terms and conditions at the time of making their application…to ensure clarity a copy will in future be sent to the customer with their card delivery.”

Tags: Stored-value card, Payment systems, prepaid credit cards, Credit card, Prepaid