Prepaid Debit Card Reviews, Complaints, Etc

Tag: curtis arnold

Credit Card Breach Doesn’t Compel Action
The past year has seen an unprecedented level of attention devoted to the many problems that result from data theft. Countless news articles and opinion pieces have followed in the wake of the high profile theft of customer information at big name retailers such as Target, Neiman Marcus and, more recently, Home Depot. So what is the response to a credit card breach on the individual level? Much of the time it is simply this: just hope for the best.

That’s one of the main findings from a recent CardRatings.com survey of 2,000 Americans aged 25 and older. Among the Americans who were surveyed, only 25 percent believed they had fallen prey to a data breach. Of those who reported being a victim of data theft, the response was hardly uniform and often not the proper steps to take in order to protect their credit and finances. Here are the actions people took:
- 51 percent checked their credit card statement
- 45 percent checked their credit report
- 54 percent checked their bank account
- 38 percent stopped using their credit card
- 33 percent stopped using their debit card
- 24 percent signed up for credit monitoring
- 24 percent put a credit freeze in place
Actually reviewing one’s credit report – an essential step after a data breach – not only occurred less than half the time among survey respondents, younger and older people were least likely to do it. Only one-third of those between the ages of 25 and 34 and just 40 percent of those 65 and older checked their credit report.

The survey also revealed widespread ignorance of card security basics. Just over half of respondents could correctly identify that a credit card is safer to use than a debit card. Furthermore, only 20 percent of those asked could say with certainty whether or not an EMV chip, a technology that boosts card protection significantly, currently protected their payment card. Although not asked in the survey, it’s unlikely many respondents would have been able to note that prepaid debit cards offer more protection than credit or debit cards in the event of a data breach – identity thieves can only steal the amount of money that has been loaded onto the card.

“Given how widespread data breaches have become, every consumer in America is likely to be affected at some point. We simply can’t afford to stick our necks in the sand and hope the problem will go away,” says Curtis Arnold, editor-in-chief of CardRatings.com and founder of this site. “The bottom line is that we all need to get more involved and educated.”
September 13, 2014
11 Ways to Raise Your Credit Score, Fast

By Curtis Arnold and Donna Freedman

A recent survey from the National Foundation for Credit Counseling indicates that more people would be embarrassed to admit their credit scores (30%) than their weight (12%).

While crash diets don’t usually work and can be unhealthy, it is possible to change your credit score fairly quickly. But just as with weight loss, “quickly” is a relative term. Seeing any improvement could take 30 to 60 days, according to Liz Weston, personal finance columnist and author of “Your Credit Score, Your Money & What’s At Stake.”

But nothing will change at all if you just sit there on the couch, eating Cheetos and charging items on the Home Shopping Network. So get moving!

The first thing to do is get a copy of your credit report from AnnualCreditReport.com. The three major credit reporting bureaus must give you one free copy per year, so plan to order one every four months. Another great resource is WisePiggy which provides a truly free credit score, advice and information, all with no strings attached.

Then use one or more of the following tips to boost that three-digit number that has increasing power over our everyday lives.

1. Dispute errors. Mistakes happen. You can dispute errors online through Equifax, Experian and TransUnion. After you’ve fixed any foul-ups, you might try to…

2. Negotiate. You can’t deny that you stopped paying a credit card bill when you were unemployed last year. But you can ask creditors to “erase” that debt or any account that went to collection. Write a letter offering to pay the remaining balance if the creditor will then report the account as “paid as agreed” or maybe even remove it altogether. (Note: Get the creditor to agree in writing before you make the payment.)

You might also be able to ask for a “good-will adjustment.” Suppose you were a pretty good Visa customer until that period of unemployment, when you made a late payment or two – which now show up on your credit report. Write a letter to Visa emphasizing your previous good history and ask that the oopsies be removed from the credit report. It could happen. And as long as you’re reading the report, you need to…

3. Check your limits. Make sure your reported credit limits are current vs. lower than they actually are. You don’t want it to look as though you’re maxing out the plastic each month. If the card issuer forgot to mention your newly bumped-up credit limit, request that this be done.

4. Get a credit card. Having one or two pieces of plastic will do good things to your score – if you don’t charge too much and if you pay your bills on time. In other words, be a responsible user of credit. Look for the best deals on CardRatings.com.

Can’t get a traditional card? Try for a secured credit card, taking care to choose one that reports to all three major credit bureaus. And if you can’t get a secured card, you might ask to…

5. Become an authorized user. This means convincing a relative or friend to be added to his or her existing credit card account. If you’ve had a checkered financial history, don’t be surprised if you hear the word “no” a lot. But you might luck out, especially if you’re a young person who has no history of poor credit use.

Offer to put an agreement in writing stating how much you can spend and how you will get your share of the bill to the cardholder. Then “do your part and use the card responsibly,” says Beverly Harzog, author of “Confessions of a Credit Junkie.” In other words, don’t buy more than you can afford and don’t leave your co-signer hanging when the bill is due. The point is to learn to use credit responsibly.

6. Under-use your cards. Yes, we did just tell you to get credit by any means possible. But don’t whip out the plastic to pay for everything. The “credit utilization ratio” should be no more than 30% and ideally even less. Harzog says that a 10% credit utilization ratio will “maximize this part of your FICO score.”

For example, suppose your Mastercard has a $1,500 limit and you routinely charge a grand a month. It doesn’t matter if you pay it all off before it’s due. What matters is the credit bureaus think “Curtis is using two-thirds of his credit! What a spendthrift!” And if you’re a cash-free kind of guy? Then try to…

7. Raise your credit limit. Ask your creditors to increase your limit, i.e. making that Mastercard good for up to $3,000. Be careful with this one, though: It works only if you can trust yourself not to increase your spending habits accordingly. Otherwise you’ll be right back to using 66% of your credit each month and how will that look?

8. Don’t close any cards. Canceling a credit card will cause your available credit to drop, which doesn’t look good to a bureau. One way to keep a card active is to use it for a recurring charge such as a utility bill. There’s room for that in your budget, right?

9. Mix it up. Using a different kind of credit can make for a modest boost to your score. For example, you might take out a small personal loan from the credit union or buy a piece of furniture or appliance on installment (but only if you’re 100% sure you can and will meet the payment schedule).

10. Pay your bills on time. Seriously. Your payment history – including the ones you pay late or skip altogether – makes up a whopping 35% of your FICO score. If you’re absent-minded or merely overwhelmed (Hi there, parents of young children!), then for heaven’s sake, automate your payments. Even better than paying on time is to…

11. Pay your bills twice a month. Using too much of your credit limit at any given moment doesn’t look good. Suppose your limit is $3,000 and a month’s worth of havoc (car repair, doctor bills, plane ticket for kid to get to college) means you’ve charged up $2,9000. Sure, you plan to pay in full by the 18^th of the month – but until then it looks like you’re maxing out yet another card.

Instead, make one payment just before the statement closing date and second one right before the due date. The first will likely reduce the balance that the credit bureaus see and the second makes sure you won’t pay interest or a late fee.

(Curtis Arnold regularly writes and blogs about credit, debit and related personal finance topics and founded CardRatings.com and BestPrepaidDebitCards.com, which provides advice and rates and reviews credit cards, prepaid debit cards and related products. He is a regular Forbes contributor and is regularly featured by national media outlets including The Wall Street Journal, The Today Show and Good Morning America for his expertise in the credit industry.

Donna Freedman writes about personal finance for Money Talks News and other websites and magazines, and blogs at DonnaFreedman.com.)

May 5, 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
Beware The Prepaid Debit Card Trojan Horse

The use of prepaid debit cards for tax refunds hurts the poorest citizens

by Curtis Arnold

It’s a cliché, but it bears remembering: if something sounds too good to be true, it probably is. And to be sure, the prepaid debit card industry has a long and ongoing legacy of hyperbole, with card issuers saying plenty about the ease and convenience of their plastic products and precious little about often-predatory fees.

Obviously, it’s no surprise whatsoever to see companies with wares to hawk ignore or downplay the perils of prepaid debit cards and instead tout their benefits. But increasingly it is presumably impartial and consumer-oriented governments that are extolling the wisdom of using prepaid debit cards to deliver tax refunds to the millions of Americans – 17 million adults, or 8 percent of all U.S. households, by the Federal Deposit Insurance Corporation’s (FDIC) latest tally – who lack bank accounts and can’t take advantage of direct deposit.

The arguments government officials in states like Oklahoma, Connecticut and Virginia make in favor of utilizing prepaid debit cards to deliver tax refunds to so-called unbanked citizens sound persuasive. For the citizens themselves, receiving a refund via a prepaid debit card instead of a paper check means they’ll get their money weeks faster than if they had to wait for snail mail. Speed is no small matter for many low-income Americans who use their refunds to pay off high-interest payday loans that they may be forced to take while waiting for a check from the U.S. Treasury.

The governments themselves also insist that prepaid debit cards are a boon to all taxpayers. The crux of the argument is that cash-strapped governments can garner big savings by delivering refunds electronically with prepaid cards instead of printing and mailing physical checks. At least one study reported that it cost nearly $1 more to mail a check than to deliver an electronic payment.

In this era of belt-tightening austerity, that sort of taxpayer-saving government efficiency is to be cheered, right? Not exactly. Persuasive new research by John Friedman, an assistant professor of public policy at the Harvard Kennedy School, dismantles the deceptively alluring argument that tax refunds delivered on prepaid debit cards are good for everyone. In an article at Bloomberg Law, Friedman concedes that state governments can trim their own costs by switching from paper checks to prepaid debit cards. But the problem is that many of the hefty fees associated with prepaid debit cards – such as an account set-up charge and fees for taking money out of an ATM – are pushed off on to the taxpayers receiving the refunds. In his research, Friedman cites data from the now discontinued federal tax refund program in which taxpayers received money on a MyAccountCard. Recipients of refunds on that particular prepaid debit card paid an average of $19 during the first six months of use, an amount far and above the $1 governments save.

What is particularly troubling about this rush towards offering – and sometimes actually mandating – those who don’t have bank accounts receive their refunds on prepaid debit cards is who is being impacted. Unbanked Americans are typically poor. Forcing the poorest among us to shoulder what amounts to a minimal government cost savings sounds too bad to be true. Unfortunately, it increasingly is.

September 20, 2013