Pre-pay cards are marketed as an answer to the issue of financial exclusion by providing a means of payment in shops and online to those without bank accounts. However, the HBOS subsidiary says, these cards have limited functionality and charge their holders regular fees that they can avoid by taking out a basic bank account.

Pre-pay cards can carry a variety of fees and charges, Halifax points out. Many of these cards have to be purchased and can then charge up to GBP15 each time they are loaded with cash. Charges can include card purchase fees, usage fees, annual renewal fees and withdrawal fees.

Halifax uses the example of a talkSport prepaid Maestro card, which charges up to GBP3 for every GBP100 credited, and thus could cost the cardholder up to GBP72 a year for loading an average of GBP200 per month.

Pre-pay cards may seem like the answer for someone without a bank account but they can be very costly even for just a few basic transactions every month, said Paul Marriott-Clarke, head of banking at HBOS. A basic bank account, such as Easycash, is by far the better option for those who have struggled to get a bank account previously. They are free, have more facilities and offer greater protection against losses. They add up to a much better deal than a pre-pay card.