New figures have suggested that a growing number of people are using pre-paid credit cards due to economic uncertainty and a mistrust of banks.
EZPay, which offers a pre-paid MasterCard, reports that it has seen applications “rocket” in the last six months. It says business surged particularly after changes to the tax and benefits system took effect this spring.
EZPay says applications have risen month on month with particular spikes in March and April, when business was up 38 per cent and 92 per cent respectively on previous months. The company’s customer feedback has suggested that tax credit changes, National Insurance increases and the rising cost of living are prompting householders to cut back and use a pre-paid credit card to avoid amassing more debt.
EZPay managing director Paul Smith said, “Prepaid cards are becoming increasingly popular because they offer access to traditional bank services such as electronic payments, online purchasing and ATM usage without a bank account or going through any credit checks.”
He added, “Because users can only spend money loaded on to the card there is no chance of racking up expensive debt.”
He added that pre-paid cards allow users to “take control” of their money and said many preferred the cards to risking having to pay expensive overdraft fees.
