Tuesday, May 27, 2014

New rules for prepaid credit cards (finally)

If you’ve ever used a prepaid credit card, you’re likely familiar with their flaws. Fortunately, the Federal government has also caught onto them and has recently created new rules to govern them.

Despite the government’s move to eliminate expiry dates on gift cards, prepaid credit cards—which are essentially gift cards you can use anywhere—were, until recently, allowed to do so. They were also allowed to charge exorbitant “activation” fees (which could be as high as $5 on a $50 card) and “monthly fees” (which could be as much as $2.50/month if you didn’t use up the balance after six months).

Thankfully, the government’s moves will now prohibit expiry dates and maintenance fees (within the first 12 months of activation), and will require all key information to be revealed in a manner that is “clear, simple and not misleading”.

Do you have a prepaid credit card horror story to share? Would you ever consider giving them another try, now that the new rules are in place?

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