Credit and Debit Card Ratings

Money Management Made Easy Using Prepaid Debit Cards

How prepaid debit cards can help keep you on budget and in control of your finances

They’re the kind of stories that make people shake their heads in disbelief. Layered with no small amount of schadenfreude, these are the tales of talented athletes whose prowess on the field and court earn them both adulation from fans and millions of dollars per year. Yet somehow, through horrific spending habits and bad advice, all of those millions disappear. ESPN recently aired a documentary, appropriately titled “Broke,” chronicling the commonplace financial problems of once wealthy athletes, which included a stunning list of athletes who have declared bankruptcy: names like Mike Tyson, Dorothy Hamill, Derrick Coleman, Bill Buckner and many, many more.

While it’s easy enough to cluck disapproval about the profligate ways of pampered sports stars, the unfortunate reality is that the bad financial habits that lead people like Terrell Owens to go broke are just as common among the less well known and well paid among us. And in fact, while there may be less zeros involved with the debts, there are plenty of people who chronically spend more than they make. One of the main culprits that allow that sort of bad behavior to spiral out of control, of course, is the credit card. Indeed, convenient and necessary as they might be, credit cards are all too often the bane of sound money management.

This all may sound like familiar territory, but given the rampant problem of indebtedness in this country it’s worth revisiting. As anyone who has ever had one knows well, credit cards have a limit, the maximum amount you can charge. But let’s be honest: credit card limits aren’t individually tailored to your financial situation and there are rarely instances when people can afford to bump up against their credit limits. And if you’ve reached that point, you’re already doing damage to your credit, a signal to lenders that they should jack up the interest rate they charge you on mortgages and car loans because you just might not have the money to repay them.

Sometimes, good money management – which, in the end, is all about not spending more than you have – requires a little tough love. Which is where prepaid debit cards come in. The reason prepaid cards won’t get you into the kind of trouble a credit card with a high limit can is deceptively simple: there’s no borrowing (that is, credit) involved. In other words, a prepaid debit card forces you to live within your means because it only allows you to spend money that you have already earned and used to fund, or load, the card. You can’t put money on the card unless you have the money in the first place. In a way, it’s like awarding yourself an allowance.

There are other ways a prepaid debit card aids the money manager lurking somewhere inside us all. Knowledge truly is power when it comes to managing your finances. For one thing, you can easily keep track of your prepaid card balance online or on your smart phone. A prepaid card can also be an enormous help in crafting a family budget. Take the time to review a month’s spending on your prepaid card. Who knew you were spending $10 a week on sodas? Well, now you do, and that knowledge should help you devise a budget that reflects your priorities.

There are other, less obvious ways that a prepaid card can help with money management. Cash flow is an important aspect of sound finances and prepaid debit cards can be helpful in aiding the swift delivery of income tax refunds for those who don’t have bank accounts. According to the Federal Deposit Insurance Corporation (FDIC), about 30 million American households don’t have bank accounts. If someone has a bank account and opts to get their refund deposited directly, they can expect to wait about two weeks from the time they file their return. But if they have no choice but to wait for a paper check, it takes 6 to 8 weeks for a refund to arrive. By contrast, people with prepaid cards, whether they have bank accounts or not, can get their tax refund deposited almost immediately, eliminating the need for any more refund-anticipation loans.

Prepaid cards aren’t perfect, of course. And while prepaid debit card issuers charge fees, you can still get a card with minimal fees by shopping carefully. “Some prepaid debit cards are loaded with fees than can often resemble a minefield. There are, however, prepaid debit cards that have very few fees. Comparison shopping for prepaid debit cards is more important than almost any other financial-services product because you can, in fact, save hundreds of dollars each year by choosing a fee-friendly version,” says John Ulzheimer, president of consumer education at SmartCredit.com.

Who knows, if Terrell Owens or Bernie Kosar or any of the other athletes who have had financial problems had been using prepaid debit cards they might be remembered today only for their athletic achievements.

Category: Best Low Fee Prepaid Cards

Millions of people are turning to prepaid debit cards as a smart alternative to carrying cash and writing checks. Almost anyone can qualify and they don’t require a credit check or a bank account.

Though they carry credit card logos and can be used anywhere a credit card is used, unlike a credit card, they do not offer a line of credit. The user can only spend the amount that has been loaded onto the card or placed into the account associated with the card.

There are dozens of debit cards on the market, many of them issued by the same bank, but fee structures are vastly different. Bestprepaiddebitcards.com has done all the research for you and provides comprehensive reviews to help you decide which card is best for you.

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  • Money Management Made Easy Using Prepaid Debit Cards

    Money Management Made Easy Using Prepaid Debit Cards

    How prepaid debit cards can help keep you on budget and in control of your finances

    They’re the kind of stories that make people shake their heads in disbelief. Layered with no small amount of schadenfreude, these are the tales of talented athletes whose prowess on the field and court earn them both adulation from fans and millions of dollars per year. Yet somehow, through horrific spending habits and bad advice, all of those millions disappear. ESPN recently aired a documentary, appropriately titled “Broke,” chronicling the commonplace financial problems of once wealthy athletes, which included a stunning list of athletes who have declared bankruptcy: names like Mike Tyson, Dorothy Hamill, Derrick Coleman, Bill Buckner and many, many more.

    While it’s easy enough to cluck disapproval about the profligate ways of pampered sports stars, the unfortunate reality is that the bad financial habits that lead people like Terrell Owens to go broke are just as common among the less well known and well paid among us. And in fact, while there may be less zeros involved with the debts, there are plenty of people who chronically spend more than they make. One of the main culprits that allow that sort of bad behavior to spiral out of control, of course, is the credit card. Indeed, convenient and necessary as they might be, credit cards are all too often the bane of sound money management.

    This all may sound like familiar territory, but given the rampant problem of indebtedness in this country it’s worth revisiting. As anyone who has ever had one knows well, credit cards have a limit, the maximum amount you can charge. But let’s be honest: credit card limits aren’t individually tailored to your financial situation and there are rarely instances when people can afford to bump up against their credit limits. And if you’ve reached that point, you’re already doing damage to your credit, a signal to lenders that they should jack up the interest rate they charge you on mortgages and car loans because you just might not have the money to repay them.

    Sometimes, good money management – which, in the end, is all about not spending more than you have – requires a little tough love. Which is where prepaid debit cards come in. The reason prepaid cards won’t get you into the kind of trouble a credit card with a high limit can is deceptively simple: there’s no borrowing (that is, credit) involved. In other words, a prepaid debit card forces you to live within your means because it only allows you to spend money that you have already earned and used to fund, or load, the card. You can’t put money on the card unless you have the money in the first place. In a way, it’s like awarding yourself an allowance.

    There are other ways a prepaid debit card aids the money manager lurking somewhere inside us all. Knowledge truly is power when it comes to managing your finances. For one thing, you can easily keep track of your prepaid card balance online or on your smart phone. A prepaid card can also be an enormous help in crafting a family budget. Take the time to review a month’s spending on your prepaid card. Who knew you were spending $10 a week on sodas? Well, now you do, and that knowledge should help you devise a budget that reflects your priorities.

    There are other, less obvious ways that a prepaid card can help with money management. Cash flow is an important aspect of sound finances and prepaid debit cards can be helpful in aiding the swift delivery of income tax refunds for those who don’t have bank accounts. According to the Federal Deposit Insurance Corporation (FDIC), about 30 million American households don’t have bank accounts. If someone has a bank account and opts to get their refund deposited directly, they can expect to wait about two weeks from the time they file their return. But if they have no choice but to wait for a paper check, it takes 6 to 8 weeks for a refund to arrive. By contrast, people with prepaid cards, whether they have bank accounts or not, can get their tax refund deposited almost immediately, eliminating the need for any more refund-anticipation loans.

    Prepaid cards aren’t perfect, of course. And while prepaid debit card issuers charge fees, you can still get a card with minimal fees by shopping carefully. “Some prepaid debit cards are loaded with fees than can often resemble a minefield. There are, however, prepaid debit cards that have very few fees. Comparison shopping for prepaid debit cards is more important than almost any other financial-services product because you can, in fact, save hundreds of dollars each year by choosing a fee-friendly version,” says John Ulzheimer, president of consumer education at SmartCredit.com.

    Who knows, if Terrell Owens or Bernie Kosar or any of the other athletes who have had financial problems had been using prepaid debit cards they might be remembered today only for their athletic achievements.

  • Debit Cards and Rewards

    Debit Cards and Rewards

    The demise of debit card rewards program have been greatly – well, make that slightly – exaggerated

    The government’s response to the financial meltdown in 2008 was years in the making and an extremely controversial piece of legislation that passed on a strictly party line vote. One component of the sweeping Dodd-Frank Act, which President Obama signed into law in 2010, is now thought of as the death knell for debit card reward programs.

    Inserted into Dodd-Frank Act at the last minute, the so-called Durbin Amendment, named after its sponsor, Illinois Senator Dick Durbin, capped the fees banks can charge retailers when customers purchase something with a debit card. The Durbin Amendment capped at 21 cents the fee banks are allowed to charge retailers when a customer swipes a debit card. Earlier, banks charged an average of 44 cents per transaction. Banks complained that the new limit would cost them billions of dollars, which is certainly true, and in response began to institute a variety of new fees on checking accounts and rolling back their rewards programs to compensate for the lost revenue. (You can take a look at the full Dodd-Frank Act / H.R. 4173 at the following link, but be warned: this is an 848 page PDF file and it may take a while to load, especially if you are on a slower connection. http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf)

    Contrary to the protests, though, not all debit card rewards programs are extinct. Here are a few that are still kicking:

    Cash Back Lives

    Unlike so much of the jargon used in the financial world, this is a program that does exactly what it says. You get a small percentage of your purchase amount credited back to your bank account. However, there are some limitations. This bonus is applicable only if you purchase at participating retailers. Ally Bank, Beneficial Bank and PerkStreet Financial offer cash-back rewards programs. For example, the online bank PerkStreet offers 1% cash back on most purchases and 2% if you purchase from select online retailers, including Amazon, Target, BestBuy and Wal-Mart.

    Points and Prizes

    As much as people love to get cash back for purchases they have to make anyway, earning a few extra bucks doesn’t feel at all like getting a present. Many debit card issuers understand that there’s more of a thrill when your use of their card actually earns you something tangible, like a meal at a restaurant. That’s why banks and credit unions reward their customers with points for everything from carrying high balances to making minimum deposits to, of course, using their debit cards.

    These rewards programs are straightforward: use the debit card to earn points, which can then be redeemed for a variety of different prizes. For instance, at the time of this writing, Chase has the Disney Visa debit card, which offers deals such as a $50 credit toward Disney Cruise Line vacations and a 10% discount at select Disney Resort restaurants. Logix Federal Credit Union’s debit card reward points that can be used on electronics, round-trip travel on any major airline, gift cards and even adventures like hot air balloon rides and whitewater rafting.

    Size Matters

    With all the protests banks were lodging about the impact of the Durbin Amendment, you may wonder how banks can still afford to offer rewards. It’s simple. The Durbin Amendment does not apply to banks that have less than $10 billion in assets. So, smaller banks are not affected.

    Don’t Rush In

    Keep in mind that rewards programs are not offered by banks out of selfless altruism. No, banks promote these reward debit cards because they make the bank money. As with so much in the personal finance universe, that is accomplished through fees. Most debit reward cards come with fees. For example, Bank of America’s annual fee for its Alaska Air debit rewards card is $30. Don’t forget that there is no such thing as a free lunch. Rewards programs are aimed at making accounts more attractive; they don’t make the account fundamentally better.

    So, when opening a debit card account, make sure that the basic features of the account fit your needs. Don’t rush into an account just for the rewards program. Otherwise, your fees could easily surpass your rewards — and where’s the reward in that?

Credit and Debit Card Ratings