A few days ago, I examined options for pre-paid credit cards, the modern day wannabe equivalent of a traveller’s cheque. The idea is simple and not without appeal: you buy a credit card and deposit money into the credit card account. Later, you use it to pay for travel expenses. When the card is lost of stolen, you might have lost the $220 remaining on the card at the time, but your bank account, house and livelihood is not tied into the missing piece of plastic.
Within seconds of highly scientific research, I concluded it’s a scam, a method of luring fools into handing more money than before over to the card provider. Basically, it works like this:
You’d receive a piece of plastic worth pennies, and they provide database infrastructure worth a fraction of a penny per transaction. Then, they receive several levels of assurances from you, including of course the full amount of money which you’d think you might need at some future point in time. They play with your deposit until you need it, and then some. In return, they take absolutely zero risk. Zero, zilch, naught, none.
For the pleasure, they charge an initial fee in the £5..10 range, or a monthly fee in the £3…13 range (some providers charge both, initial and monthly), and a variety of staggering per-transaction fees. Some even charge for the pleasure of loading your money into their account. [click]
Call me old-fashioned if you like. In my naive little world, I am happy to pay for a good service. The offers under review all seemed like highway robbery to me. I’d consider switching credit cards as soon as someone offers pre-paid cards as a free service to cardholders for use during holidays, or for use with online transactions. You’d think this should be dead cheap for the card companies to provide, and be a real service to boost customer loyalty and attract new customers.
Real service. Looks like I’m on the wrong planet.