Friday, 26 March 2010

Moneyfesto: prepaid charade

The news that basic bank accounts are to be guaranteed for all under the recent budget is most welcome, so why doesn't it headline the Direct.gov summary: How the budget affects you? For those facing financial meltdown or living on subsistence income, that which is most crucial seems buried amidst details of savings and pensions. When every thought is what will cost more, less or the same, surely savings and pensions tick the not applicable box?

The media slant is also interesting. For starters, coverage is fairly low key and the ususal prejudices and misinformation abound. Take the issue of not having a cheque book for instance – hardly relevant given they're about to become obsolete. Comments that some accounts restrict standing orders and direct debits comes across as yet another deterrent to anyone who may be considering a basic account, depsite this only applying to a minority of such accounts and most certainly not to those operable by bankrupts. Add to this the not so subtle aside that financial experts believe an increase in basic banking will herald the end of free banking and the justification for excluding those in poverty is achieved: the affluent majority will suffer if we promote accounts for all.

There is good reason for this. In the months since the credit crunch became stark reality with the advent of the Lehman's crash, the market for managed accounts and prepaid credit cards has seen a boon. Offering methodone for the masses who are hooked on credit, financial services have seized the opportunity to guide us back to the good times whilst stripping us of every fleeting penny that we own. Fool's gold cards and bogus basic accounts abound. Indeed the pitch for our custom seems to good to miss: "But supposing you could get hold of a prepaid credit card? It would come with all the benefits that a standard credit card had, but there would be no way that you could spend more than you could afford to, no matter how much you were tempted to!" 

Nothing more is offered than the facility to deposit a sum for which a range of transactions are then charged by fee or pro rata. So much for free banking...
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