Prepaid Debit Card Reviews, Complaints, Etc

Tag: center for financial services innovation

  • Visa Attacks Prepaid Fee Confusion

    Visa Attacks Prepaid Fee Confusion

    It’s getting harder and harder for prepaid card issuers to be sneaky about their fees. Earlier this year the Pew Charitable Trusts issued a report detailing the lack of uniformity when it comes to prepaid fee disclosures and proposed a model disclosure box to make it easy for consumers to compare the fees associated with different products. Soon after that announcement, Chase declared that its Chase Liquid Prepaid Card would adopt Pew’s disclosure suggestions.

    On June 3rd, Visa decided to weigh in on the prepaid fee disclosure issue. Working in conjunction with Pew and the Center for Financial Services Innovation, Visa announced that it has developed an easily understandable designation for consumers to look for in order to know quickly whether a prepaid card meets certain standards related to fees, disclosure and benefits. Prepaid card issuers that qualify can include a seal on their packaging and marketing materials that indicate their compliance with certain criteria. Think of it as a prepaid version of the “fair trade” sticker that graces coffee packaging.

    “We felt it was important to go beyond current requirements in the marketplace and bring transparency to this growing product area,” says Ryan McInerney, president of Visa Inc. “This Visa designation will signify a new level of simplicity, protection and opportunity, enabling cardholders to confidently manage their spending every day.”

    In order to qualify for the Visa designation, prepaid cards must meet a variety of standards such as offering a flat monthly fee that includes all day-to-day uses for the card. In other words, there are a lot of things that prepaid card issuers can’t charge for, such as point of service (POS) cash back, in-network ATM transactions, PIN or signature transaction fees and customer service or overdraft fees.

    Additionally, qualifying cards must also offer specific consumer protections. Among other things, to receive a seal of approval cards have to include FDIC insurance, dispute resolution rights and Visa’s zero liability coverage.

    According to Pew’s Susan Weinstock, who directs the group’s consumer banking initiatives, Visa’s move is important. “Visa is taking an important step forward by acknowledging the importance of clear disclosures and consumer protections,” she says. “It’s particularly encouraging that Visa is not allowing overdrafts on these cards, in light of our research on consumer prepaid card use.”

  • JPMorgan Launches Financial Solutions Lab

    JPMorgan Launches Financial Solutions Lab

    American Express just got a little competition in its efforts to appeal to those living outside the financial mainstream. On May 29th, banking giant JPMorgan Chase & Co. announced that it has committed to invest $30 million to create the Financial Solutions Lab.

    A collaboration with the Center for Financial Services Innovation, the new Financial Solutions Lab will tap the expertise of entrepreneurs, non-profits and academics to develop products and technologies to help people save more money and build better credit. The new venture is geared towards helping those who are not fully served by the current financial system. “Living outside the financial mainstream puts financial security further out of reach for one out of every four American households that rely on high-cost, non-bank services to manage their finances,” says Bruce McNamer, the CEO of the JPMorgan Chase Foundation. “The Financial Solutions Lab will bring together the best and the brightest to identify innovative solutions that help consumers increase savings, improve credit and build assets.”

    Buttressing its decision to launch the Financial Solutions Lab, JPMorgan Chase and the University of North Carolina at Chapel Hill also released a white paper that illustrates the need for improved financial services. For instance, the paper notes that less than 10 percent of working American families are financially prepared for retirement while more than half do not have an adequate emergency fund. The research also shows how important savings can be as a vehicle for upward mobility. Indeed, 71 percent of kids born to low-income parents who managed to be big savers were able to move out of the bottom income quartile.

    This new JPMorgan Chase initiative will, among other things, host competitions that encourage social entrepreneurs to devise ways to help encourage saving and credit building. In doing this, JPMorgan is echoing American Express’s well-publicized efforts to provide solutions to millions of so-called unbanked Americans. Besides its checking account alternative Bluebird and Serve prepaid cards, American Express sponsored a new documentary film, Spent, which shines a light on the difficulties and expense those who don’t have bank accounts or credit cards face to do simple tasks like pay bills and cash checks.

  • Nine Tips for Avoiding Fees on Prepaid Cards

    Nine Tips for Avoiding Fees on Prepaid Cards

    Fees are inevitable with prepaid debit cards. But there’s much you can do to keep them low.

    By Lucy Lazarony

    To get the most value out of a prepaid debit card, you’ll want to avoid and minimize all the fees that you possibly can.

    “You want to understand the fee structure of the card,” says Jeanne Hogarth, Vice President of Policy, at the Center for Financial Services Innovation.  “Are there fees to do balance inquiries? Doing things online generally should be free. If you need to talk to a real live person, can you do that and is there a fee?”

    Monthly maintenance, transaction and reload fees are at the top of the list of prepaid card fees that you will want to avoid, according to Linda Sherry, Director of National Priorities for Consumer Action.

    Sherry suggests these nine tips for avoiding fees on prepaid debit cards:

    1)   Setting up direct deposit for your paycheck or other monthly income to avoid prepaid card monthly maintenance and transaction fees.

    2)   Loading a certain amount onto your card each month.

    3)   Maintaining a minimum balance on the card.

    4)   Getting cash back when making a purchase at a grocery store or other retailer, instead of paying an ATM fee.

    5)   Checking your balance by whichever method is free. (It’s very common to encounter a charge to check your balance at an ATM. Avoid card issuers that charge a fee to check your balance online or using an automated phone help line).

    6)   Loading by whichever method is free (if there is one).

    7)   Making transactions using whichever method is free (if either PIN or signature transactions are free).

    8)   Avoiding transactions that go over your balance.

    9)   Using automated “help” rather than a live customer service representative, if your issuer charges you for this, and viewing your statement online rather than getting a paper copy.

    Once you’ve avoided all the fees on a prepaid card that you can, the next step is minimizing the fees you are required to pay for using the card.

    “Scrutinize fees that are mandatory and cannot be avoided,” Sherry advises. “For example, a few cards offer fee-free transactions while others waive certain fees when you maintain a minimum balance or use direct deposit.”

    And you may be able to avoid monthly fees because of how often you use a prepaid debit card, Hogarth says.

    “Some cards even have no monthly fees but you have to use it five times a month,” Hogarth advises.

    And if you like withdrawing cash at ATMs, Sherry recommends using network ATMs because “even if there is a fee, it will be less expensive than using an out-of-network ATM.”

    A prepaid card issuer’s website may be the best source of information for a card’s fee information, according to Sherry.

    “Fee disclosures may appear on the card packaging, but the card issuer’s website will probably be your best source of complete information,” Sherry says.

    Digging through the fee information for prepaid cards could take some time. This fee list from Sherry provides definitions of 17 fees charged by prepaid card issuers.

    “Unfortunately, there’s no law that requires a standard fee chart for prepaid cards but some issuers are more upfront about their fees than others,” Sherry says. “Before you buy a card, look for a prepaid card where the issuer discloses all the fees clearly. When you’ve narrowed down your options, calculate your monthly cost for each card based on how you expect to use it.”

     

Prepaid Debit Card Reviews, Complaints, Etc