Prepaid Debit Card Reviews, Complaints, Etc

Author: Curtis Arnold

The Comeback Card – Secured credit cards offer a helpful route to the real thing

The horror stories about credit cards are real. Far too many people have used them irresponsibly and dug themselves a deep, deep financial hole that takes years or decades to get out of. But those unfortunate tales shouldn’t overshadow the very real fact that credit cards have revolutionized how we live, arguably doing for commerce what the automobile did for travel and what the mobile phone has done for communications. Just imagine the pre-credit card days when travel, shopping or going to a restaurant meant carrying around a wallet full of cash or traveler’s checks.

These days, in the wake of the financial crisis – which both spawned tougher regulations and prompted banks to be circumspect about extending credit – many people simply can’t get a credit card. While that is probably a good thing overall, it means that people who have a poor credit history or are simply too young to have established a credit history cannot take advantage of the many real benefits of having a credit card in their wallet. That is, unless they opt to obtain a credit building card, aka as a secured credit card, and begin a journey to obtaining a full-fledged credit card.

What’s ‘Secured’ About It?

A secured credit card comes with a string attached, a fairly big string. To get a secured card, you have to put up some money.

This protects the bank or credit union that issues the card. Fair or not, if you have shaky credit, you’re considered a high-risk customer. To reduce that risk, the bank requires you to deposit a certain amount of money for security. If you can’t repay what you owe on the card, the bank can take money out of that account to cover itself.

The Payoff Down the Road

A secured credit card is like training wheels on a bicycle. It’s meant to get you to a place where you no longer need it. The goal is for your secured card to evolve into a regular credit card, cutting the string and eliminating the need for the security deposit.

When you have a secured card, you’re under a microscope. Think of it like getting a try-out on a baseball team; the coaches want to see how you perform before giving you a slot on the roster. In the same way, the bank keeps track of how you handle your account, and so do the three major credit bureaus, which are Equifax, TransUnion and Experian (not all secured cards report to the bureaus). While you get some of the albeit limited benefits of a full-on credit card, you’re able to show that you pay off your bill on-time.

Beverly Harzog, an independent credit card expert and author of the forthcoming book “Confessions of a Credit Junkie,” says a secured card “is a great way to rebuild or establish credit.” But she adds: “The key is to use the card responsibly.”

Plastic Look-alikes

Because you have to deposit money before you can use a secured credit card, it may sound to some like a debit card, especially a prepaid debit card. But it’s very different.

A debit card draws money directly from the user’s bank account to make purchases. Using one is like writing a paper check. There’s no credit involved. A prepaid debit card takes this one step further, letting you access funds without even having a bank account. The customer “loads” and “reloads” the card with money (there are various ways to do this) and spends as needed.

If you simply want the speed and convenience of paying with plastic, debit cards are handy. But because they don’t involve credit, they do nothing to build your credit score. The secured credit card has that niche pretty much to itself.

How to Apply

Because banks face limited risk, they’re fairly receptive to an applicant for a secured credit card, assuming the person has money to deposit. Still, not every application gets a green light. For instance, a recent bankruptcy may limit a person’s eligibility and an especially reckless use of credit in the past may scare banks off.

Offers for secured cards are everywhere. The important things for consumers are to find one that is issued by a reputable lending institution (an FDIC-insured bank or NCUA-insured credit union), choose an affordable sum to deposit, and to compare secured card offers.

Deposits for secured cards range from the low hundreds of dollars to more than $5,000. A card’s credit limit is tied to the size of the deposit.

The deposit amount and credit limit are not always the same, though. In a few instances, the deposit is more than the credit line. And there are a few “partially secured credit cards” that offer a higher limit than the amount deposited. “This is a little riskier for the issuer,” Harzog notes. Banks will provide more leeway to applicants it deems to be less of a financial risk.

Fees, Interest and the Finish Line

As is the case with any financial product, shoppers considering a secured credit card should look for ones that have fees that are as few and as low as possible. While annual fees are common with secured cards, a good secured card will not have an annual fee in excess of $35 or so.

Even the best deal on fees (no fees at all) will do you little good if you’re stuck with an outrageous interest rate. You have to balance the two factors, look at the big picture and do the math. That being said, a good secured credit card should not charge more than 19 percent annual interest.

For most applicants, the important part of having a secured credit card is the end game. When will their card become a regular credit card? Harzog, the credit card expert, cites 12 to 18 months as the average period, “if [the card is] used responsibly.” But she adds the caveat: “The specifics of each person’s credit file will be a factor.”

A Helpful Tool

Being shut out of the credit market is a difficult situation. But getting a secured credit card shows lenders that you’re a serious person, willing to bet your own money that you can handle your obligations. And it allows you to prove yourself month by month. This financial tool has helped millions of people to establish or rebuild their credit and, in so doing, helped them get on the path to financial freedom.

May 2, 2014
How To Use A Secured Card To Rebuild Your Credit

Who among us hasn’t needed a second chance? Or a first opportunity? For the millions of Americans who were battered by the Great Recession and came out of it with a tattered credit score, plus the legions of young people who haven’t had a chance to earn and spend money wisely, these are not abstract questions.

Even though the emergence of financial products like prepaid debit cards have made it easier to get some of the ease and benefits of plastic, solid credit still matters. Try to buy a house or a car and you’ll quickly learn how important it is. If you have bad or no credit, you’ll be turned down for a loan or offered an ugly interest rate.

This is where secured credit cards come in. Secured cards are a bit like a bicycle with training wheels – a tool to practice on and demonstrate your capacity to operate something bigger, faster and potentially more dangerous. Unlike unsecured credit cards, the secured variety typically requires a cash deposit in order to establish a credit line. If you put down a $500 deposit, you’ll have a credit limit of $500 (keep in mind that the money you put upfront is not used to pay off monthly charges). This initial deposit is the bank’s way of insuring that it doesn’t get burned if you do not pay your bills.

The best thing about secured credit cards is that, in most cases, the issuer reports your repayment behavior to the three main credit bureaus – TransUnion, Experian and Equifax. Translated, this means that paying your bill on time and following the terms and conditions of the card can, over time, boost your credit score. This makes a secured credit card an extremely valuable tool if, and this can’t be emphasized strongly enough, you are timely and consistent in paying your bill.

Still, there are red flags to watch out for with secured cards. Start by making sure that any secured card you consider will, in fact, report to the three main credit bureaus. If they do not, and your goal is to establish good credit, you’re wasting your time. Like any financial product, it is important to know that not all secured cards are equal when it comes to fees. Shop around. While secured cards generally have higher fees than unsecured ones, there can be big differences in the interest rates, activation charges and account maintenance fees. It’s also smart to know the card issuer’s policy regarding returning your initial deposit when you close the account. Sometimes it can take a few days to get your money back.

Be careful to avoid any secured credit cards that do not have a payment grace period. If it does not, that means you will pay interest on any charge you make from the moment your card is swiped. “With no grace period, there is no way to avoid paying interest,” says Amber Stubbs, editor of CardRatings.com. “With regular credit cards you can avoid interest altogether if you pay your statement in full.” Fortunately, the lack of a grace period is a rarity, although the Horizon Gold Card is one that does this. Also watch out for limitations on how you can use the card. The Horizon card, for instance, can only be used to make purchases on a Horizon outlet store website.

None of these cautions are meant to scare you away from using a secured credit card to rebuild your credit. But being aware of some of the potential problems will allow you to safely ride your training wheel equipped bike without falling into potholes or getting run off the road.

–

Curtis Arnold is a credit expert and co-founder of BestPrepaidDebitCards.com

Originally posted on Forbes.com

April 28, 2014
Are Prepaid Cards Making Checking Accounts Obsolete?

If you grew up in the 1970s, 80s or even 90s, you’ll remember how hard it could be to have a private phone call. Plenty of households had just one phone with a cord, which made it nearly impossible to avoid eavesdropping siblings and parents. Of course, we all know what happened to landlines when cell phone technology became mainstream: Even a couple of years ago more than half of American homes had already ditched them, a number that has certainly increased by now.A similar extinction awaits traditional checking accounts. Why? The same sort of disruption that pulled the cord on millions of landlines is already underway in the world of personal finance, thanks to the rapid emergence and improvement of prepaid debit cards. The numbers alone show that checking accounts have already begun their walk into history. Indeed, between 2009 and 2012, prepaid card transactions grew at an annual rate of over 33 percent, with the total number of transactions reaching 3.1 billion in 2012 alone. Fitch Ratings recently declared that the rise of prepaid card transactions is likely to continue.There are a number of reasons to believe that Fitch is right and all of those reasons are very bad news for checking accounts. In part, the reason prepaid debit cards will make checking accounts obsolete is because the accounts themselves have become less and less attractive. Long gone are the days when checking accounts could be counted on to be gratis. In fact, 41 percent of banks say they will not offer free checking this year, an uptick of 8 percent since just last year. To be fair, banks are choosing to add fees in response to federal legislation that reduced what they could charge for regular debit card transactions and left a big hole in their revenue.But an even bigger reason the days of checking accounts are numbered is significant improvements in prepaid debit cards themselves. Long the last resort of people who couldn’t obtain bank accounts or credit cards – the so-called “unbanked” – prepaid debit cards were layered with outrageous fees. Some prepaid cards are still very bad deals (especially those with celebrity names on them) but the influx of cards from large financial institutions like American Express have vastly improved the consumer friendliness of these products. In fact, earlier this month the Pew Charitable Trusts released a study that found that many prepaid cards are more affordable than checking accounts.Besides the fact that checking accounts can no longer be counted on to be free, prepaid cards increasingly offer other features consumers find attractive. Since you can only spend money that’s already in a prepaid account, it’s impossible to either bust your budget or incur hefty overdraft charges. According to Shane Tripcony of BestPrepaidDebitCards.com, “The most common statement I get from current prepaid cardholders is their appreciation for that fact that they no longer get hit by overdraft fees with their card. It keeps their spending in check and does not allow for unplanned-for expenses. Some prepaid debit cards allow users to tap into a fee-free nationwide ATM network and others permit cardholders to write checks. “The bill paying and check writing capabilities without the threat of overdraft charges is what really helps prepaid cardholders,” said Tripcony.

Wireless provider T-Mobile can see the writing on the wall for checking accounts. In January the communications company jumped into financial services with the launch of Mobile Money a combination prepaid debit card, money management app and nationwide ATM network. For T-Mobile customers (non-customers can be subject to more fees), Mobile Money can be a basically free replacement for a no longer free checking account. And in a way, isn’t it appropriate that a cell phone company is helping to hasten the demise of a dinosaur every bit as obsolete as a landline?

Originally posted on TheDollarStretcher.com

April 23, 2014
In-case you missed it… Stories of Interest: 4/11/2014

In-case you missed it; The best from the world of personal finance blogs – all in one place

Financial lessons from “Downton Abbey”

There are plenty of people – Anglophiles and lovers of tawdry storylines, in particular – who just can’t get enough of “Downton Abbey.” But for Money Crashers writer, Jacqueline Curtis, the long-running show can actually provide a sober financial education to go along with its pure entertainment value.

At least that’s the conceit of her delightful recent story, “9 Financial Lessons to Learn From Downton Abbey,” which, it should be noted, contains spoilers. And in truth, observant viewers can take some timeless tips from what the Crawleys do right and, mostly, wrong. For instance, the ups and downs and plot twists that make “Downton Abbey” so fun to watch can also be a reminder to, as Curtis puts it, prepare for anything and everything. Although we’re living in the 21^st century, that credo is meant to push people towards checking or rechecking their emergency savings and health and life insurance policies.

Other good advice to emerge from “Downton Abbey” includes avoiding any kind of investment that promises to be a sure thing and the eternal truth that ignoring financial problems won’t make them go away. I’m sure even Curtis wouldn’t argue that her observations are more entertaining than the show. But she certainly managed to draw some helpful messages from an unlikely source.

Source: 9 Financial Lessons to Learn from “Downton Abbey” (Spoiler Alert) by Jacqueline Curtis on MoneyCrashers.com

Is Your Personal Finance Adviser Scamming You? Four Ways to Tell

It’s completely understandable for people to seek out the help of a professional financial advisor. Most of us have such jam-packed lives that there’s little time, and even less inclination, to learn what is necessary to manage our retirement, education, vacation, or new car or house savings. And while most financial advisors are honest and intend to help you reach your goals, humans are humans, which means there are some scammers out there.

Helping you avoid predatory advisors is exactly what blogger Trent Hamm sets out to do in his recent post, “4 Ways to Tell That Your Personal Finance Advisor is Scamming You.” Appearing both on Hamm’s blog, The Simple Dollar, as well as U.S. News and World Report Money. Among Hamm’s solid tips are to listen carefully to what he or she focuses on in your discussions. “The foundation of every recommendation a good advisor makes is on some aspect of your financial situation,” he writes. “They should be leading with you at all times.”

Hamm provides other pointers, such as asking specifically about an advisor’s fee structure and how they make money as well as proving why they think an investment is the best option. Hamm’s overall post is a good reminder that we all still have personal responsibility for meeting our financial goals, even when we let a professional take the lead.

Source: 4 Ways to Tell That Your Personal Finance Advisor is Scamming You By Trent at TheSimpleDollar.com

Starving players? College athletes often go to bed hungry due to money issues.

While it’s not exactly a story about personal finance or investing, a story in The Washington Post the day after the University of Connecticut won the NCAA men’s basketball championship caught our eye. The story, “National Champ U-Conn’s Napier Says He Goes to Bed Starving,” was written by Soraya Nadia McDonald and, well, the title pretty much says it all. Because Huskies’ star point guard Shabazz Napier is a student athlete and amateur, he says he often goes to bed hungry because he can’t afford food.

The comments come at a time when the issue of whether college athletes can unionize and receive compensation is hotter than ever. Last month a National Labor Relations Board official in Chicago ruled that Northwestern University football players are employees of the school and therefore eligible to unionize. The issue of collegiate athletes getting money for their time on the court or the field is not one that will go away anytime soon. For his part, though, Napier has established himself as enough of an NBA prospect that it’s doubtful he’ll have to go to be hungry much longer.

Source: National champ U-Conn.’s Napier says he goes to bed starving By Soraya Nadia McDonald on The Washington Post

April 10, 2014
Capital One Introduces Credit Monitoring Tool

One undeniable product of the recent high-profile data breaches at Target, Neiman Marcus and other retailers is customer skittishness. Worries about the security of personal information stored on credit and debit cards has consumers understandably concerned every time they pull out their plastic to make a purchase. In response, some card issuers are providing tools that – while they don’t make the cards themselves any safer – can quickly alert consumers if their account has been compromised.

In February, for instance, Discover announced that it would provide a free FICO score on all its card members’ monthly statements. Presumably, an unexplained drop in a FICO score could alert someone that something was amiss. Yesterday Capital One went a good bit further by introducing Credit Tracker, which provides its customers free credit scores, credit bureau alerts and a host of other tools to help people manage and understand their credit.

Credit bureau monitoring, in particular, is meant to address anxiety people have about identity fraud. Capital One customers utilizing Credit Tracker will now receive an alert whenever a new account is opened in their name or if there is a change of address or employment, all of which are indicators of potential identity theft.

While fraud protection is one aspect of Credit Tracker, there are other features that make it easier for customers to manage their credit. A person’s credit score plays a large part in determining whether they can get a mortgage or a car loan and, if they qualify, what sort of interest rate they’ll be charged. By accessing Credit Tracker via the Capital One mobile app, consumers can not only instantly view their credit score but also see a report card with letter grades on the primary factors that determine that score. Additionally, Credit Tracker allows Capital One customers to run various simulations to see how actions they take will affect their credit score.

The release of Credit Tracker comes in the wake of a Capital One survey that showed that 41 percent of respondents didn’t know their credit score. The same survey also revealed that while 85 percent of respondents were worried about credit card fraud only 32 percent utilized a credit monitoring service.

Capital One

Capital One Financial Corporation is a U.S.-based bank holding company specializing in credit cards , home loans , auto loan s, bank ing …

March 26, 2014
American Express Announces Financial Inclusion Efforts at SXSW 2014

The annual South by Southwest Festival (SXSW) in Austin, Texas has earned a global reputation as a place where talented bands and filmmakers go to do something special. Now it’s American Express’s turn to go big. At this year’s SXSW Interactive Festival, the technology arm of the sprawling event, American Express unveiled several major initiatives to both shine a spotlight on the needs of the tens of millions of Americans who are not well-served by the current financial system and to do something about it.

Appropriately enough, American Express chose SXSW as the place to show a trailer to a movie it is helping produce. The film, Spent: Looking for Change, premiering this summer, is a documentary that tells the stories of ordinary Americans who are frozen out of the traditional financial system. Forced to rely on expensive options like payday loans and money orders, the movie shows how time-consuming and costly it is for an estimated 70 million Americans to move money around and pay bills, tasks that people with bank and credit card accounts take for granted. “Not having a bank account makes it incredibly difficult to manage your day to day finances, it often means you can’t establish credit, and therefore can’t buy a home, finance a car, or take out a student loan,” says Davis Guggenheim, the executive creative director and the filmmaker behind An Inconvenient Truth and Waiting for Superman.

While the film is meant to raise awareness for the problems faced by Americans not served by the mainstream financial services industry, American Express’s other announcements at SXSW are meant to find solutions. One of the company’s new efforts will be to devote funding to technology startups focused on improving the options available to the financially disenfranchised. Specifically, American Express Ventures, a Silicon Valley effort targeted at finding technology innovation in financial services, will seek out technology startups that provide people greater access to capital, promote savings and develop new credit building models.

In addition, American Express announced the establishment of a Financial Innovation Lab. Set to begin work this June, the lab will give researchers, technologists and professionals working with the underserved an opportunity to work together and share ideas and solutions. “We want to help modernize traditional banking and advance the next generation of products. By supporting new technology as well as the work of researchers and promising startups, I believe we can bring more people from the margins to the mainstream,” says Dan Schulman, group president of Enterprise Growth at American Express.

There’s also plenty of self-interest in American Express’s announcements at SXSW. The company has released low-fee prepaid debit card products, Serve and Bluebird, over the past few years and has made no secret of its efforts to grow its business by meeting the needs of America’s unbanked and under banked.

To view the trailer and to find out more about American Express’ commitment to improving financial inclusion visit: www.spentmovie.com.

For more information, check out the video below. This this great video by Dan Schulman of Amex as he discusses the issue of financial inclusion is quite an eye opener. the trailer link and the video below.

After watching the trailer and the video, share your thoughts in the Comments section below. We would love to hear from you. Also, please help spread the word. Tweet, Like, Share. It is information worth sharing.

March 25, 2014