Tough new regulations will stop pre-paid card issuers from cashing in


Many like to pay on plastic

PRE-paid card users will no longer risk being left out of pocket as tough new e-money regulations have come into force this week.

Up until now firms offering pre-paid cards and gift cards, which are pre-loaded with cash to use at a later date, have been raking in between £5 and £7million extra each year from unused balances that have been left on cards.

Many users are unaware that these cards can have expiry dates and any cash left unspent by that date was lost as issuers refused to offer refunds.

Small balances also became trapped on cards as retailers often refuse to accept these cards as part-payment for goods or for transactions under a minimum amount. This situation was madness as the whole point of pre-paid cards is to manage money better and to avoid the temptation of overspending on credit cards.

The Financial Services Authority is clamping down on firms which have been preventing people from accessing all the cash stored on cards.

The Electronic Money Regulations 2011 mean the e-money issuers can no longer refuse to repay the full value of any unused e-money if you ask for it within six years from the end of your contract.

In certain circumstances they can charge a fee but this has to be made clear in the original contract.

Cash stored on these cards is not covered by the Financial Services Compensation Scheme and some cards, such as those that can only be used for one store, are not regulated.

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