In the United Kingdom, lending and prepaid cards have been taken to a new level of insanity with the release of the Zebit “prepaid” card. We’re highlighting this story as an issue of concern compared to the prepaid cards we at Tutuka provide which are a way of actually avoiding debt!
Short-term lender Zebit has launched a “prepaid” Mastercard with a massive four-figure APR and is encouraging people to go shopping.
The Zebit card claims to be a prepaid card but is effectively a short-term loan with an interest rate of a whopping 2,012%.
Like payday lenders, Zebit targets the financially excluded with poor credit records. All you need to apply is a job and a bank account, and be over 18 years of age.
Although Zebit claims to offer a prepaid Mastercard to help people without a credit card buy things online, the crucial difference between it and other prepaid cards is that it’s Zebit that loads the card, not the cardholder. And this comes at a cost.
Once the customer has told Zebit how much they want to borrow for their purchase they can set up a repayment schedule to suit their needs.
New customers are limited to borrowing up to £800 and this can be repaid over a maximum of seven months.
Zebit card loads or loans come with a massive APR of 2,012%. According to its website, if you borrowed £800 for seven months you’d repay £285.50 a month for seven months, a total of £1,998.50. That means your interest payments would be an eye-watering £1,198.50.
Even if you repaid the £800 in one month you’d repay £1,040 which includes an interest bill of £240.
As well as a “virtual” card, Zebit offers an upgrade to an “enhanced” virtual card or a real physical card. Both these options come with a range of fees, which, presumably, all contribute, to the card’s four-figure APR.
Zebit’s website doesn’t state what happens if you miss a repayment, but if other short-term lenders are anything to go by, there will be a range of late payment charges and default fees.
Like many payday lenders, Zebit’s advertising is arguably irresponsible. Its homepage declares “Buy what you want: Zebit gets you instant cash so you can buy it before it’s gone.” Elsewhere on the website Zebit claims its company mission is “to help people buy the things they want, when they want them, on terms that best suit their needs.”
We’re not here to tell you how to manage your debt but be afraid!