Prepaid Debit Card Reviews, Complaints, Etc

Tag: credit card

Bitcoin Debit Card Launched

The digital currency bitcoin has been an object of fascination, skepticism and confusion. That confusion (What is it? How do you use it? What’s it worth? Who accepts it?) has been a huge hurdle to more widespread acceptance and use of bitcoin.

In an effort to help the currency make that jump into the mainstream, last week bitcoin storage company Xapo launched a debit card. “In the spirit of bringing bitcoin to the masses, we are proud to announce the Xapo Debit Card – the first bitcoin debit card that allows users to spend bitcoins just like cash all over the world, right from their Xapo Wallet,” the company declared on its blog.

In theory, it sounds like an interesting idea. By releasing a debit card, Xapo lets bitcoin enthusiasts move from the realm of online purchases to actually buying dresses and cereal in brick and mortar stores. On a practical level, it works like this: every time someone makes a purchase with their Xapo Debit Card, a certain amount of bitcoin the cardholder already has in their account is sold off in order to cover the purchase. How much bitcoin has to be sold depends on the current value of bitcoin and what currency the purchase is being made with.

When this story was initially reported by Gigaom.com, Xapo claimed that it had inked a deal with MasterCard. That would have been a major development because it would have meant that bitcoin could be used wherever MasterCard is accepted – which is a lot of places worldwide. The story was updated with the news that Xapo actually had not secured any sort of partnership with MasterCard.

Observers quickly noted other problems with the new Xapo Debit Card, which the company said would be available in two months. One blogger, Dan Seitz, noted the absence of any fee information, which is obviously a big problem for any consumer thinking about getting a debit card. Seitz also noted the issue of bitcoin’s fluctuation in value. “Considering bitcoin’s tendency to whipsaw wildly in value, there’s a very real chance that you might not be able to cover some purchases,” writes Seitz.

May 1, 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
How To Keep Holiday Spending Joyful

Prepaid debit cards can help you stick to your budget.

by Shane Tripcony

It seems to happen earlier and earlier each year. Even before the little ones don their witch and ghost outfits to go out trolling for candy on Halloween night – let alone before anyone has planned out their Thanksgiving Day feast – many stores around the country already are decorated with evergreen wreathes and plastic Santas.

To be sure, this makes absolute sense for retailers, many of whom rely on the holiday shopping season to account for as much as 50 percent of their annual revenue. In other words, it’s just good business to try and stretch the duration of the holiday shopping season as long as possible, even if it does occasionally also stretch credulity.

But what might be good for storeowners is not necessarily in the best interest of all of us shoppers. Which is why so many personal finance pros urge us to make a detailed holiday shopping budget and stick to it. The first part is easy. Indeed, according to a recent survey by Capital One Bank, fully three-quarters of all Americans say they are likely to come up with some sort of holiday spending budget this year. But the same study also hints at the reality of what usually happens: Almost half of those who say they’ll budget for the new sweaters and Xbox games they plan to buy aren’t confident that they’ll actually stick to their best-laid plans.

But it is possible to be both generous for the holidays while simultaneously ensuring that you don’t wake up with a financial hangover in the New Year. Step one is to do exactly what personal finance experts have been urging holiday season after holiday season and actually make a budget. Only you can determine what makes sense given your current financial situation and expenses. The consulting firm Accenture pegs the amount U.S. consumers are likely to spend this year on gifts at $646, an increase from $582 last year.

Whatever you decide that number should be, step two is to take that amount and load it onto a low-fee prepaid debit card. Doing so – and being disciplined about using only that one card for your shopping and not adding more money to it once it is depleted – will ensure that you stick to your budget, even when your holiday spirit is threatening to overwhelm your best financial interests. Why not just use a gift card? That could make sense if you decide that you want to do all of your shopping at just one store. The beauty of dedicating a prepaid debit card to all of your holiday shopping is that it gives you the flexibility to make purchases wherever Visa and MasterCard are accepted, which is basically everywhere.

Just as we here at BestPrepaidDebitCards.com urge you to select cards with low fees for day-to-day use, the same imperative applies for holiday cards. You still want to select a card – like Serve from American Express or Chase Liquid – that doesn’t hit you with many fees. There’s no need to be a Scrooge this holiday season. Just get a little budgeting help with a prepaid debit card to ensure the good cheer lasts into 2014.

November 8, 2013
Pros and Cons of Traveling with a Prepaid Debit Card

Should you pack a prepaid debit card for your next trip?

By Lucy Lazarony

Going on a trip? Here’s a look at the advantages and disadvantages of traveling with a prepaid debit card in your wallet.

An alternative to credit cards. If you don’t have a credit card or don’t want to travel with one, a prepaid debit card may be a good option, according to Robert Firpo-Cappiello, Executive Editor of Budget Travel.

“Traveling with a prepaid debit card is preferable for travelers who do not want to use a credit card,” Firpo-Cappiello says. “Reasons for not using a credit card include a history of racking up charges and high interest (and) already having too many credit cards with high balances or balances at the limit.”

Terry Maher, general counsel for Network Branded Prepaid Card Association, has sent each of his three children on travel adventures with prepaid debit cards. He monitors their spending and their locations online and adds funds as needed.

“A credit card is probably just as convenient but do I want to give a credit card to a 22-year-old or a 20-year-old?” Maher says. “I can check their balances daily online.”

Good for budgeting. A key advantage of traveling with a prepaid debit card is that it forces you to travel on a budget. The amount of money you have to spend on your trip is the amount of money you have loaded on the card, minus any fees you pay for using the card.

“The major upside to traveling with a prepaid debit card is that you’ve established your budget and you have a tool that forces you to stick with it!” Firpo-Cappiello explains.

Unlike a debit card tied to a bank account, with most prepaid cards you don’t have to worry about paying overage charges.

“By using prepaid rather than a card tied to your bank account, you’ll avoid any overage charges,” Firpo-Cappiello says. “But, of course, that means you have to stick to your limit — no wiggle room.”

Ease of use. Prepaid debit cards are accepted at the same merchant locations as credit cards and debit cards tied to bank accounts.

“Because you can use a prepaid debit card at the same places that accept credit and non-prepaid debit cards, it can be ideal for getting the best possible exchange rate and convenience in places, such as on a plane where the only accepted method of payment for snacks and entertainment is plastic,” Firpo-Cappiello advises.

“A good prepaid debit card provider also will offer replacement and emergency cash disbursement as well as the ability to “reload” the card while you’re on the go.”

But there are some key downsides to traveling with a prepaid debit card.

Voluntary consumer protections. Unlike credit cards and debit cards tied to bank accounts, there are no federal consumer protections for lost or stolen prepaid debit cards. If your prepaid debit card is lost or stolen, it’s up to your issuer to reimburse you.

In most cases, if you have registered a prepaid card with the issuer you can recover the full balance when you report a card is lost or stolen, according to Consumer Action.

That’s why it’s so important to register your prepaid card before you travel.

“These cards have to be personalized,” Maher says.

Fees. Another downside to traveling with a prepaid debit card is the fees that you pay for making transactions with the card.

Understanding the fees charged on a prepaid debit card is key to getting the most value out of a prepaid card, Maher advises.

“You need to understand how fees are and be prudent on how you use the card,” Maher says.

For example, how much are fees for using an out-of-network ATM? You’ll save money on ATM fees if you stick to in-network ATMs, whenever you can, when you travel.

“If you’re in the U.S. and you (withdraw cash) at an in-network ATM, you won’t pay a fee at all,” Maher says.

Maher suggests studying a card’s fee structure, including load fees, before signing up for a card.

“Do your homework,” Maher says.

No chip for European travel. Not all prepaid debit cards come with a smart chip, which may be needed for self-serve terminals and preferred by merchants in some European countries.

“A lot of Europe has gone chip and PIN,” Maher explains. “You might want to look for an issuer that offers a chip-based card. So you won’t have trouble using (it) at any merchant.

“If you’re in countries that rely heavily on chip cards, there might be certain transactions you can’t do because it’s not a chip card.”

October 14, 2013
FTC Charges Marketers with Deceiving Small Businesses

The Federal Trade Commission has charged an operation that sells credit and debit card payment processing services to small businesses with violating federal law. The FTC seeks to halt the allegedly illegal practices and return money to victims.

The defendants are Merchant Services Direct, LLC (MSD), also doing business as Sphyra, Inc., Boost Commerce, Inc., Generation Y Investments, LLC., Kyle Lawson Dove; and Shane Patrick Hurley. The Washington State Attorney General’s Office has simultaneously filed an action against these defendants in the Superior Court for Spokane County, Washington.

According to the FTC’s complaint, MSD agents also dupe customers into leasing new card processing terminals for two to four years, by falsely claiming they are either free, or that their current “swipe” terminals are outdated or incompatible with its services. Agents then persuade merchants to sign fine-print, binding contracts falsely labeled as applications they are told can be cancelled at any time. Victims soon discover their new lease obligation after being billed while still owing thousands of dollars on their previous lease.

Defendants also tout on various versions of their website “Guaranteed Lowest Rates,” claiming merchants could “save 30%” with “whole sale [sic] processing” or have “anywhere from 20% to 30% savings when switching to” MSD. According to the FTC, there are no wholesale rates, as third parties process card payments, not MSD. As alleged in the complaint, those who call MSD’s customer service department reach employees who either won’t help or promise to waive fees and issue refunds, but do not. Customers who were promised they could cancel the “applications” they signed with no penalty are charged substantial cancellation fees, according to the FTC’s complaint. Generally, only in response to complaints filed with the Better Business Bureau and state attorneys general have the defendants refunded money or waived fees.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Eastern District of Washington. In addition to filing the lawsuit, the FTC has sought a court order immediately halting the unlawful practices along with an order freezing the defendants’ assets and appointing a receiver over the corporate defendants.

The FTC acknowledges the assistance of the Washington State Attorney General’s Office and the Better Business Bureau of Eastern Washington, North Idaho, and Montana.

For more information, visit: http://www.yumanewsnow.com/index.php/news/latest/3872-ftc-charges-marketers-with-deceiving-small-businesses-into-buying-credit-debit-card-processing-services-and-equipment

September 2, 2013
Swipe-Fee Rule Rejection Helps Merchants and Banks’ Cost

After winning a court ruling on claims they were over charged billions of dollars under and unlawful rate set by the Federal Reserve, retailers battling banks over debit-card transaction costs may soon benefit from lower fees. In Washington, U.S. District Judge Richard Leon ruled on Tuesday that in setting the cap on debit card transaction fees at 21 cents, the Federal Reserve considered data it wasn’t allowed to use under the Dodd-Frank law and neglected to bolster competition in card networks.

“The board’s final rule not only fails to carry out Congress’s intention; it effectively countermands it!” Leon wrote in his ruling.

Before Federal Reserve regulations cut back on perks such as reward programs and free checking to soften the blow, Lenders collected about $16 billion annually from swipe fees. Unless overturned, the decision will force regulators to revisit rules that bankers said would cost them 45% of their swipe-fee revenue.

“In effect since October 2011, the Fed’s rule will stay in place until the central bank drafts new regulations or interim standards,” Leon said.

Frank Keating, the president of the American Bankers Association, said the decision “will harm banks of all sizes and make it more difficult for institutions to serve their customers.” “The price controls enacted as a result of the Durbin Amendment served one purpose – further lining the pockets of our nation’s big-box retailers at their own customers’ expense,” Keating said in a statement. “It was – and still is – all about trying to help retailers increase profit margins while providing no real benefit to consumers.”

Merchants previously paid banks an average of 44 cents per transaction. The Fed first proposed cutting the sum to 12 cents before settling on 21 cents after bankers complained.

“Tuesday’s ruling will lead to lower interchange rates for billions of debit card transactions each year,” said Durbin, who filed a brief in the case supporting the retailers. “The Fed’s 2011 decision to bend to the lobbying by the big banks and card giants cost small business and consumers tens of billions of dollars and did not do enough to rein in the anti-competitive, anti-consumer practices of Visa and MasterCard”.

Leon, who said the Fed rule raised costs for debit transactions under $12, said he was inclined to give the Fed “months, not years” to rewrite the rule.

“The starkest, most powerful evidence of how absurd this rule was is that it resulted in a price increase,” Jeffrey Shinder, an attorney at Constantine Cannon LLP in New York who filed a brief for a group of retailers including 7-Eleven Inc. and Wendy’s Co.

The case is NACS v. Board of Governors of the Federal Reserve System, 11-cv-02075, U.S. District Court, District of Columbia (Washington).

For more information, visit: http://www.bloomberg.com/news/2013-07-31/fed-s-debit-card-swipe-fee-limits-rejected-by-u-s-judge.html

August 31, 2013