Prepaid Debit Card Reviews, Complaints, Etc

Author: Chris Warren

  • The Occupy Prepaid Card: The Occupy Money Cooperative is being launched

    The Occupy Prepaid Card: The Occupy Money Cooperative is being launched

    Nearly two years after the Occupy Wall Street movement grabbed the attention of the media, politicians and general public, the rag-tag collection of protesters is back in the news. This time, however, the loose coalition – whose ire was targeted at the financial and political institutions that cement advantages for a few while ignoring the plight of the many – is announcing its entry into the very banking industry it so loathes.

    Indeed, according to a July 23 article in Forbes, the Occupy Money Cooperative is being launched, and its very first product will be a prepaid debit card. Not surprisingly, the ethos behind the Occupy Money Cooperative and its new prepaid debit card is both decidedly democratic, and a new way to highlight what its founders see as the predatory practices of the banking industry. “We launched [the Occupy Money Cooperative] because we felt the way the for-profit banking industry operates in the U.S., it intrinsically exposes the U.S. economy to risk and makes us vulnerable to the consequences but, above all, fails many millions of Americans who don’t have bank accounts and are denied banking services,” founder and director Carne Ross told Forbes contributor Laura Shin.

    The article goes on to point out that the Occupy Money Cooperative will be run in a similar fashion as a credit union, which are owned and controlled by members, albeit the Occupy version will have membership open to anybody who applies. The new entity’s web site explains that it hopes to, among other things, impact the entire financial community by providing an example of how a financial services organization can function in a way that benefits society as a whole. It also commits itself to being low cost, transparent and available to anyone. The first test of that philosophy will come with the release of a prepaid debit card, which the article says will happen once it has raised sufficient money for staff and operating expenses. The so-called Occupy Card will be extremely low cost, charging users just $0.99 per month. But other important details about typical prepaid debit card fees, including for ATM withdrawals and other transactions, were not yet available. “Like any prepaid card, there will be a range of fees. We hope the Occupy Card will be among the best value on the market, and one thing we guarantee are that all costs and fees will be completely transparent and clear to the consumer,” Ross told Forbes.

    Given the legacy prepaid cards have had of victimizing low-income consumers who have no other banking options available, this product alone could stand as one of the Occupy movements most tangible accomplishments.

  • The Good, The Bad And The Ugly – Card Purchase Disputes

    The Good, The Bad And The Ugly – Card Purchase Disputes

    Looks can be very deceiving. At least that’s the case should you decide to dispute a purchase you made using a prepaid, debit or credit card. While they can all look like the same hunk of plastic –and function with a quick swipe – there’s a very big difference in the legal and consumer rights that back you up if you are unhappy with the quality of the goods that you purchased and enter into a dispute with a merchant.

    In a nutshell, credit cards offer a lot of protection, debit cards a little and prepaid cards none at all. Indeed, with credit card purchases, you have the full force of the Fair Credit Billing Act on your side. Under the Electronic Fund Transfer Act, which covers debit card transactions, you have limited merchant dispute rights, except for unauthorized transactions. And there are no federal consumer protections for purchases made with prepaid debit cards.
    Let’s take a closer look at each.

    Credit cards
    If you have a beef with the quality of something you bought at a store, it’s best if you made the purchase with a credit card. In fact, when disputing a purchase with a credit card, you can request the card issuer charge back the amount of the purchase to the merchant until the dispute is resolved.

    “On a credit card, you have a big advantage and the best protection due to the Fair Credit Billing Act,” says Mary Ann Campbell, a certified financial planner who teaches personal and family finance at the University of Central Arkansas and runs the web site www.moneymagic.com.“You can file a dispute claim and the charge can be charged back to the merchant until the dispute is decided.”

    Debit cards
    Things aren’t so straightforward when it comes to debit cards. When disputing a purchase with a debit card, your rights under federal law are limited, except for unauthorized purchases made with the card. “Consumers don’t have the same protections in the case of debit cards, which are covered by Regulation E, the Electronic Funds Transfer Act,” says Gerri Detweiler, a credit expert, author and host of Talk Credit Radio. “That law gives the consumer the right to dispute a charge in the case of unauthorized use but that’s it.”

    In other words, your best bet when it comes to disputing a charge with a debit card is if you’re the unfortunate victim of a crime or simply lost your card. Otherwise, if you’re unhappy with the quality of an item purchased with a debit card, it’s up to you to try to get the money refunded to your bank account. “If you pay for an item with a debit card and you’re unhappy with the product, you have to get your money back,” says Beverly Harzog, credit card expert and author of the forthcoming book, “Confessions of a Credit Junkie.” “You’ll need to contact the merchant and see if you can return the product or make an exchange. If you can’t work it out, then contact your financial institution for assistance. You will need to fill out paperwork and it may all work out in the end and you could get your money back. But in the meantime, you don’t have access to the amount of money that’s in the dispute.”

    Prepaid debit cards 
    And then there are prepaid debit cards, which offer no federal protections for disputed charges.“With prepaid cards, you will be stuck with the item or out the money,” says Michelle Jun, senior attorney at Consumers Union. You may reach out to your prepaid debit card issuer for assistance with a merchant dispute. Just be aware that any assistance they offer is voluntary. Also, some prepaid debit card issuers may charge fees for customer service calls.

    No matter the type of card you used to buy something, the first step in resolving a dispute with a merchant is contacting the merchant directly. “Regardless of the type of card you’re using, contact the merchant first and try to resolve your issue,” Campbell says. “Put as much in writing as possible to leave a paper trail of documents that might help you plead your case in the future.”

    The Federal Trade Commission offers consumer tips for resolving complaints with merchants and even includes a sample complaint letter.

    According to the FTC, you will want to:
    • Contact the merchant as soon as possible because some retailers have time limits on returns and refunds.
    • Keep a record of your conversations with the retailer including who you spoke with and when, and what action they promised.
    • Ask for a manager if a store employee or customer service rep doesn’t have the authority to help you.

  • Secure Your Credit Future: Get a Head Start with a Secured Credit Card

    Secure Your Credit Future: Get a Head Start with a Secured Credit Card

    A secured credit card can be a starter kit for your financial life

    By Nancy Munro

     

    It’s hard to imagine these days, but Michael Jordan wasn’t always a great basketball player. After all, the future Hall of Famer didn’t even make his high school squad one year. Which is all to say that everyone, not just Michael Jordan, progresses in life from a mere novice to (we hope) some level of expertise and skill. All it takes is steady practice and determination.

    The same could be said of our financial lives. Sometimes, we need to prove ourselves with one financial product before graduating to another that offers both more perks but also requires more responsibility – sort of like starting on the junior varsity team before making the jump to the varsity. That’s all a pretty apt way of describing the difference between so-called secured credit cards and the unsecured variety that most people are familiar with. As you’ll soon see, starting your financial life with a secured credit card can be just like getting a chance to play on the JV team while the varsity coach watches.

    First off, how is a secured card different from a so-called regular credit card? Typical credit cards allow holders to essentially borrow money, up to a set credit limit. The money borrowed can be paid back each month or, more likely, over the course of many months or even years, all the while earning the card issuer a tidy amount of interest. A secured credit card functions quite differently. Issued by a bank or other financial institution, a secured card requires that a certain amount of money be placed in the account before the card is activated and used. The money placed in the account is exactly the amount available for use – there’s no credit limit over and above what you put in initially.

    The reason secured credit cards function like this is pretty simple. There are plenty of people who have either no credit history or whose past use of credit cards has been shoddy enough that banks don’t want to give them another one. In other words, there are lots of people banks don’t want to lend money because there’s too high of a risk that they won’t get paid back. But that risk is eliminated with secured cards because users can only spend the money they fund the card with upfront.

    Because of that low-risk structure (at least for the banks), secured credit cards are relatively easy to get. But unlike unsecured cards, which do not require a deposit to use, secured cards have a wide range of fees, charges for everything from applications to insurance. Take some time to comb through BestPrepaidCards.com to see which cards have the best and worst fees.

    But here’s the good thing about a secured credit card. For those with either little or a checkered credit history, a secured credit card is a tool to prove that you can be trusted with the sort of credit limit a regular card offers. But you actually do have to prove that you can make timely payments on your secured credit card account.

    But if you do that, will the coach – or, in this case, the three major credit bureaus who monitor repayments and hand out the all important credit scores that banks use to determine whether someone is a safe bet to offer a credit card – actually be watching? We checked with the three major credit bureaus, TransUnion, Experian and Equifax, and only Equifax responded to say that payments made on a secured credit card are treated the same way as those made on an unsecured card. But given the relative uniformity of the three bureaus’ policies, it’s likely that Experian and TransUnion also look kindly on responsible use of a secured credit card.

    To improve or build a credit history with a secured card, here are some things you can do:

    • Not all secured cards are equal. Shop around for the best (ie. lowest) fees possible.
    • If possible, try to get a card from an issuer that also offers unsecured cards. With a good payment history, it’s likely they’ll eventually offer you an unsecured card. According to Bankrate.com, it will take diligent users of a secured card about a year before they’re offered an unsecured card.
    • Once you get the card, use it a few times a month and pay the balance in full. In other words, prove that you know how to handle plastic.
    • The secured card is not the finish line. The annual fees and other costs with a secured card mean you are spending your money to spend your own money. Use the card only until a better (unsecured) offer comes along.
    • Don’t expect the same perks with secured cards as unsecured cards. Airline miles and other gifts and offers are not the norm when it comes to secured credit cards.
  • Paying to Get Paid: Employee Costs with Employer Prepaid Card Programs

    Paying to Get Paid: Employee Costs with Employer Prepaid Card Programs

    One of the most common messages you’ll hear about prepaid debit cards these days – including here on this very site – is that they have changed significantly in recent times. In the past, prepaid debit cards were considered suitable only for millions of so-called “unbanked” Americans, those whose credit wasn’t good enough to qualify them for a traditional checking account or credit card. For a variety of reasons, however, the demand for prepaid debit cards has shifted decidedly toward mainstream consumers.

    This has been a good thing both for existing prepaid debit card customers and newcomers because increased demand has prompted large financial players like Wells Fargo, JP Morgan Chase and American Express to jump into the market. Long derided for excessive fees targeted at the most financially vulnerable Americans, prepaid debit cards as a category have certainly improved thanks to increased competition – fees are generally lower and more competitive, and some card issuers even offer consumer protection in the event a card is lost or stolen. Taken together, these developments have spawned some favorable press coverage.

    But by no means is all of the attention glowing. In late June and early July of 2013, thanks largely to a lengthy story in The New York Times, the practice of paying worker wages via a prepaid debit card has come under increased scrutiny. According to the report in the Times – and subsequent coverage in and Businessweek – large employers including Wal-Mart Stores, McDonald’s and Time Warner Cable are eschewing traditional paper paychecks and direct deposit in favor of paying wages on prepaid debit cards. The article in the Times, written by reporters Jessica Silver-Greenberg and Stephanie Clifford, quoted numerous workers, some earning minimum wage, who complained that excessive fees were eating into their already low wages. Additionally, workers interviewed said that they were not given the option to receive either a paper check or direct deposit.

    The reason some large employers have embraced prepaid debit cards as a way to pay workers is simple. It saves them money. Time Magazine, citing a calculation done on Visa’s payroll card , reported that a company with 250 employees getting paid every other week could save $10,600 annually in payroll processing costs by using prepaid cards.

    This spate of attention has already spawned an investigation. In early July New York Attorney General Eric Schneiderman initiated an inquiry into 20 companies that may be routinely using prepaid debit cards to pay their employees; a practice that has to receive written employee consent. Businessweek quoted a letter Schneiderman’s office sent to the companies. “We are concerned about excessive or insufficiently disclosed fees which may unduly reduce employees’ take-home pay.”

  • Getting A Prepaid Card In Your Wallet

    Getting A Prepaid Card In Your Wallet

    In his fascinating book, The Paradox of Choice, author Barry Schwartz goes to great length to point out that an abundance of options – whether it’s in choosing a doctor, ordering a coffee or selecting a college – can actually make us miserable. A gross oversimplification of Schwartz’s book is this: having too many choices can make us always question our eventual selection and blame ourselves for any sort of failure related to it.

    Here at BestPrepaidDebitCards.com, our aim is to provide you with enough information so that the choice you make when it comes to a prepaid debit card doesn’t generate the sort of angst Schwartz writes so intriguingly about. And to be sure, the market for prepaid debit cards has grown so sprawling that an overabundance of choices already exists. To obtain a card, you have to compare annual fees, usage limits, reloading fees, and ATM withdrawal limits. Many merchants, including grocery stores, drug stores, big box retailers like Walmart and major banks like Chase and Wells Fargo now offer their own branded prepaid debit cards.

    While we certainly do our best to make sure you don’t fall victim to the buyer’s remorse and self-doubt that Schwartz writes about, here’s a little good news: once you actually make a decision to get a particular card, actually obtaining it as a snap. Indeed, most online application forms for the major prepaid debit cards are simple and getting a card on-site at a retailer will require only a few minutes of your time.

    Part of the reason the application process is so easy and painless is because of what you don’t need. Remember, prepaid debit cards are funded by you in advance; they’re not credit cards, where the issuer is allowing you to borrow potentially thousands of dollars, which they expect you to pay back. Because of that dynamic, prepaid debit card issuers don’t need to comb through your past to see how reliable you have been in paying off old debts. Your credit history just doesn’t matter because the money you’ll be using is cash you’ve already earned. The fact that applicants don’t need a pristine credit history makes prepaid debit cards a boon to parents who want them for their teenagers, college students, and workers without bank accounts. The only thing you will really need to get a card is a form of identification, like a driver’s license or a passport. If you are under age 18, you’ll need parental permission. Because of that very low bar, and unlike a credit card, you can get a debit card immediately if you buy it from a local merchant.

    Ordering the card online means that it may take a few days to a week to arrive. That delay can be important, depending on what you need the card for. For instance, if you are planning to use it on a trip, be sure to build in enough time so that the card arrives before you take off. And also remember that you’re not just tying up the funds you put on the card. Most prepaid debit cards are not afforded the same consumer protection as credit cards under the Fair Credit Billing Act, so fees to maintain them can eat into the account funds, even when it’s not actually in your hands.

    Still, these are fairly minor considerations, especially given the overwhelming task of actually choosing the right prepaid debit card in the first place. But at least obtaining the card is a welcome break from the paradox of choice.

  • 5 Reasons Parents Should Get Prepaid Cards For Teens

    5 Reasons Parents Should Get Prepaid Cards For Teens

    Along with a driver’s license, a prepaid debit card can be one of the most important pieces of plastic a young adult can get

    Amid all the job losses and bankruptcies, our recent economic downturn has been especially difficult on young people. With a persistently dreadful job market, many college graduates are leaving school with degrees, but few prospects. Thanks to the Credit CARD Act of 2009, those under 21 are also not likely to be entering the adult world with a few years of credit history under the belt; the law prohibits anyone under 21 from getting a credit card unless a parent co-signs or they can prove sufficient income to qualify.

    There are plenty of reasons to cheer this legislation. It’s hard to argue that handing out credit cards to teenagers with no income and no restraint was a good idea. Still, credit cards used responsibly could be a real benefit to young people, ensuring them access to financial resources far from home and (hopefully) teaching vital money management skills.

    Into the void created by the elimination of credit cards for most young people have come prepaid debit cards, which offer many of the benefits of credit without some of the more distressing pitfalls. Designed to work much like a gift card from a supermarket or bookstore, prepaid debit cards allow a parent to fund the card with as much or little money as they choose, and then the teen can spend that amount when and where she likes. Along the way, hopefully, she can learn something about managing finances. Sending a child out into the adult world with a mountain of debt is obviously bad, but so too is letting them loose without any experience with plastic. Getting a prepaid card may be the answer you’ve been looking for – and it doesn’t even require a bank account.

    With all due apologies to David Letterman’s top 10 list, here are 5 reasons parents should hand their teens a prepaid debit card:

    1. It can save money. As in, it can save you money. Have you ever handed your kid a $50 bill for a $30 event and asked for the change, only to be told later that there wasn’t any money left? Once you give your son a prepaid card, he has exactly what you put on his card, nothing more.

    2. It teaches budgeting skills. Think about it. Let’s say your kid is off at college, or even in high school and still under your roof. If you want to teach them that spending decisions have consequences, simply fund a prepaid debit card with an amount you decide is reasonable for a month and step out of the way. Sure, your teen can go out and blow the entire amount in a night. But if you stay strong and don’t replenish the card’s account, they’ll probably do better the next month. Weeks of eating nothing but Ramen noodles can provide invaluable focus.

    3. It also teaches priorities. Ultimately, how we spend our money says a lot about what matters to us in life. And the same is true with teens. By handing over a prepaid debit card and giving them the freedom to choose how to spend it, you are helping them figure out the experiences and material things that really add value to their lives.

    4. Training wheels for credit cards. Unless things go terribly wrong, your teen will eventually get a credit card. Having used a prepaid debit card for a few years beforehand should give them the chops to handle credit. “Prepaid debit cards do offer a safe environment for young people to learn how to transact using plastic. Most young people will eventually use credit cards, and learning about financial responsibility in a controlled environment offered by a prepaid card will likely benefit future credit card users,” says John Ulzheimer, president of consumer education at SmartCredit.com.

    5. It can prevent a financial emergency. Adults of a certain age can probably still remember how we convinced our parents that it was a good idea to get a credit card when we were young. You know, by scaring the heck out of them with tales of losing cash and being penniless in a faraway city. Well, like it or not, the tables are turned and the same story ought to work on you now as a parent when it comes to prepaid cards. But guess what, you were right then and they are right now. Prepaid debit cards, like credit cards, can be cancelled and reissued when lost or stolen in a way that cash simply can’t.

    Of course, there are fees associated with prepaid cards — though the money you lose when your teen forgets to give you change might well exceed those fees. So go ahead and get your teen a prepaid debit card and begin them on their journey towards becoming a financially responsible adult.

Prepaid Debit Card Reviews, Complaints, Etc