Prepaid Debit Card Reviews, Complaints, Etc

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  • Retailers Lose In Latest Debit Card Swipe Fee Ruling

    Retailers Lose In Latest Debit Card Swipe Fee Ruling

    Few consumers know that there is a heated battle going on about the fees charged every time you swipe your debit card. It’s a conflict between big banks and large retailers, two politically influential and well-moneyed groups, about the current cap on debit card swipe fees. The latest round of this years-long battle was a victory for the banks.

    On March 21 the US Appeals Court for the District of Columbia overturned a lower court’s July decision that ordered the Federal Reserve to recalculate and lower its 21-cent per transaction cap on the fees charged for processing a debit card payment. Retailers cheered that decision and expressed optimism that the so-called debit card swipe fee would be reduced to as low as 12 cents. This latest ruling means that the swipe fee cap will remain at 21 cents per transaction.

    The imbroglio over how much banks should be able to charge stores for processing a debit card purchase began after the 2010 passage of the Dodd-Frank Consumer Protection and Wall Street Reform Act. Under the Durbin Amendment of that legislation, the Federal Reserve was tasked with formulating regulations that would result in swipe fees that reflected the actual costs to banks of processing a payment. Initially, the Federal Reserve proposed a cap of 12 cents, though it later revised it upwards to 21 cents. Before the passage of the Durbin Amendment and the Federal Reserve’s calculations the average debit card swipe fee was about 45 cents.

    Seeking to lower the cap even more, the National Retail Federation (NRF) and other groups filed an appeal in federal court in 2011, which eventually resulted in last summer’s ruling. Naturally, the NRF was disappointed in the court’s latest ruling. “The Fed ignored congressional intent and worked to shield debit card companies and big banks. A self-described victory for the banks usually results in higher costs for consumers,” says Mallory Duncan, NRF’s senior vice president and general counsel. NRF and its allies are considering whether to appeal this latest ruling.

    By contrast, the American Bankers Association applauded the ruling but remained critical of the establishment of a swipe fee cap in the first place. “While this decision is a welcomed outcome, the fact remains that the underlying policy – the Durbin Amendment – has not accomplished its goal of lowering prices for consumers. It has only served to increase the bottom line for big box retailers,” says ABA president Frank Keating. This is a battle that seems likely to continue.

    Prepaid Debit Card Fees Lower Than Checking Account Charges

    A recent report by Bretton Woods, Inc. shows that most consumers using prepaid debit cards to manage finances do so for less than $7.50 per month. by Chris Warren It has long been an assumption that users of prepaid debit cards turn to them as something of a last resort. But a …

     

     

     

     

     

  • American Express Announces Financial Inclusion Efforts at SXSW 2014

    American Express Announces Financial Inclusion Efforts at SXSW 2014

    The annual South by Southwest Festival (SXSW) in Austin, Texas has earned a global reputation as a place where talented bands and filmmakers go to do something special. Now it’s American Express’s turn to go big. At this year’s SXSW Interactive Festival, the technology arm of the sprawling event, American Express unveiled several major initiatives to both shine a spotlight on the needs of the tens of millions of Americans who are not well-served by the current financial system and to do something about it.

    Appropriately enough, American Express chose SXSW as the place to show a trailer to a movie it is helping produce. The film, Spent: Looking for Change, premiering this summer, is a documentary that tells the stories of ordinary Americans who are frozen out of the traditional financial system. Forced to rely on expensive options like payday loans and money orders, the movie shows how time-consuming and costly it is for an estimated 70 million Americans to move money around and pay bills, tasks that people with bank and credit card accounts take for granted. “Not having a bank account makes it incredibly difficult to manage your day to day finances, it often means you can’t establish credit, and therefore can’t buy a home, finance a car, or take out a student loan,” says Davis Guggenheim, the executive creative director and the filmmaker behind An Inconvenient Truth and Waiting for Superman.

    While the film is meant to raise awareness for the problems faced by Americans not served by the mainstream financial services industry, American Express’s other announcements at SXSW are meant to find solutions. One of the company’s new efforts will be to devote funding to technology startups focused on improving the options available to the financially disenfranchised. Specifically, American Express Ventures, a Silicon Valley effort targeted at finding technology innovation in financial services, will seek out technology startups that provide people greater access to capital, promote savings and develop new credit building models.

    In addition, American Express announced the establishment of a Financial Innovation Lab. Set to begin work this June, the lab will give researchers, technologists and professionals working with the underserved an opportunity to work together and share ideas and solutions.  “We want to help modernize traditional banking and advance the next generation of products. By supporting new technology as well as the work of researchers and promising startups, I believe we can bring more people from the margins to the mainstream,” says Dan Schulman, group president of Enterprise Growth at American Express.

    There’s also plenty of self-interest in American Express’s announcements at SXSW. The company has released low-fee prepaid debit card products, Serve and Bluebird, over the past few years and has made no secret of its efforts to grow its business by meeting the needs of America’s unbanked and under banked.

    To view the trailer and to find out more about American Express’ commitment to improving financial inclusion visit: www.spentmovie.com.

    For more information, check out the video below.  This this great video by Dan Schulman of Amex as he discusses the issue of financial inclusion is quite an eye opener. the trailer link and the video below.

    After watching the trailer and the video, share your thoughts in the Comments section below.  We would love to hear from you.  Also, please help spread the word.  Tweet, Like, Share.  It is information worth sharing.

  • Sing A Song For Financial Literacy

    Sing A Song For Financial Literacy

    From its origins as a quirky way to raise money to start a business, crowdfunding has quickly become one of the go-to methods for entrepreneurs who need cash to turn their ideas into reality. Crowdfunding has become so sufficiently mainstream that Entrepreneur now has an annual listing of the top 100 crowdfunded companies, which includes a business (Ouya, a video game console maker) that raised a staggering $8.6 million on the crowdfunding site Kickstarter. Now crowdfunding is being tapped to promote financial literacy in young children.

    Last month author and entrepreneur, Sam Renick, launched an effort on Indiegogo.com to raise $85,000 to develop an interactive website that uses music to teach kids four and older good financial habits. Renick says the website, which will be called the Dream Big Set Goals Resource Center and will feature the cartoon character Sammy Rabbit, will include videos, activities and games. Renick says that his website, should it get the necessary funding, will be the first to use music to teach young kids good financial habits.

    Renick says he was inspired to launch a website designed for young children, at least in part, because of research that underscores the importance of starting financial education very young. Indeed, Renick points to a study released last year by University of Cambridge researchers that concluded that adult money habits are largely formed by the age of seven.  This includes the important ability to delay gratification and plan ahead for purchases.

    The website’s focus on music as a learning tool is inspired by the effectiveness of campaigns such as Schoolhouse Rock, which used music and animation to teach children about subjects as complicated as how a bill becomes a law. Besides the website, Renick says that if he raises $85,000 he will also distribute 10,000 CDs to kindergarten through third grade classrooms worldwide. With 18 days remaining in the fundraising effort, Renick had raised a little over $1,500.

     

     

     

     

     

     

     

     

     

     

     

     

  • Should You Put Your Tax Refund On A Prepaid Card?

    Should You Put Your Tax Refund On A Prepaid Card?

    By Curtis Arnold and Lucy Lazarony

    All the major tax preparation companies give you this option, but does it make financial sense?  Here’s a look at the pros and cons of receiving a tax refund via prepaid cards with direct deposit.

    Fast access to your tax refund. Need a faster tax refund?  E-filing your return and requesting a tax refund be sent to a prepaid card with direct deposit or a bank account is the fastest way to go, according to the IRS website. The IRS is issuing refunds to taxpayers in as few as 10 days for those who e-file and opt to receive their tax refund by direct deposit.

    “Direct deposit is typically better,” says David Newville, senior policy analyst at the Center for Financial Services Innovation. “You’re going to get it quicker and it’s going to be more secure than a check.”

    Pocket that tax refund, pronto! (Photo credit: Tax Credits)

    Keep tax refund money separate from other accounts. Have a special project in mind for that tax refund but worried the money will disappear quickly amid your day-to-day spending? Putting a tax refund on a prepaid card will keep the money separate from your other accounts.

    “You might not want to dump it into a bank account because it might get lost in day-to-day charges,” says Ben Jackson, a senior analyst at the Mercator Advisory Group.

    Watch out for fees. The biggest downside to receiving your express tax refund on a prepaid card is the assortment of fees associated with prepaid cards.

    Joe Ridout, a spokesman for Consumer Action, a San Francisco-based consumer advocacy group, sees no advantage to receiving a tax refund on a prepaid card, especially for people with bank accounts who could simply opt to receive a direct deposit of their tax refund into a checking or savings account.

    “If you have a bank account, there’s no advantage whatsoever to getting your tax refund on a prepaid card,” Ridout says. “You needlessly would forfeit some of your tax refund with the fees that come with these cards.”

    Ridout added that prepaid cards may be appealing to consumers without bank accounts but the fees associated with prepaid cards can make them a costly choice. “The best money saving solution for consumers is to open a bank account,” Ridout says. “Because these cards are a solution that will cost you money.”

    Still, opening a bank account may simply not be possible for some people. And while it is certainly true that far too many prepaid cards charge fees that don’t make a speedy refund a wise choice, there are some exceptions. Shane Tripcony, of BestPrepaidDebitCards.com commented, “Typically, bank accounts such as free checking accounts are cheaper to operate, but for some people, the built-in limitations such as no overdraft fees make prepaid debit cards a viable alternative.  As fewer banks are offering free checking accounts, the prepaid card option becomes a good choice, despite differences in fees.  It is all in how you will use the account.”

    In fact, if you are considering a prepaid card for your tax refund, here are some low-fee options that will take the smallest bite out of your money.

    Serve from American Express . There simply aren’t many fees associated with Serve, American Express’s consumer-friendly prepaid debit card. There’s no activation fee, it’s easy to dodge the $1 monthly account charge and, importantly, cash withdrawals from MoneyPass ATMs are also free. It’s easy to get your federal tax refund sent quickly to your Serve account and, yes, there’s no charge.

    U.S. Bank Convenient Cash Card. Another good option, particularly if you live in an area with plenty of U.S. Bank ATMs, is the U.S. Bank Convenient Cash Card. Like most prepaid debit cards, it’s a snap to get your tax refund loaded for free onto a U.S. Bank Cash Card. But what sets it apart from other options is that cash withdrawals from U.S. Bank ATMs are free, as are direct deposit and bill pay.

    Chase Liquid. With 5,500 Chase branches nationwide, it’s easy to withdraw the tax refund you get loaded onto the Chase Liquid prepaid card without incurring an unwanted ATM charge. For a $4.95 monthly account charge, Chase Liquid makes it simple to avoid a long list of other fees as well.  It makes the card a worthy option for receiving a quick, relatively fee-free tax refund.

    But remember, because fees on prepaid cards vary so widely, it’s important to study the terms and conditions on prepaid cards carefully before signing up for one.

  • Chase Liquid Adopts Disclosure Recommendations

    Chase Liquid Adopts Disclosure Recommendations

    Chase has adopted consumer-friendly disclosure recommendations for its Chase Liquid prepaid card. At the same time that the Pew Charitable Trusts unveiled detailed suggestions about the types of fees and other disclosures all prepaid debit card issuers should make available to consumers, Chase announced that it would do exactly what Pew advised.

    The popular Chase Liquid prepaid card became the first product to follow Pew’s road map, which was released in hopes of making it easier for shoppers to choose between quickly multiplying prepaid card options. Although prepaid cards have seen a steady and sharp rise in popularity over the past few years, Pew notes that there are no legal or regulatory requirements that card issuers must follow when it comes to disclosures about fees, terms and conditions. Pew has also found that only 32 percent of consumers actually compare card terms before selecting one.

    By quickly implementing Pew’s disclosure suggestions, Chase may very well be grabbing a competitive advantage in the increasingly cutthroat fight for prepaid card customers. It also doesn’t exactly hurt Chase’s reputation among lawmakers, including US Senator Mark Warner, who recently introduced legislation to compel financial institutions to more clearly disclose fees related to their prepaid cards. “I commend Pew for their work on this issue and Chase for being the first prepaid card provider to adopt the disclosure box for their cards, which I proposed making standard for the industry in my legislation,” says Warner.

    The Chase Liquid disclosure form is attached to the packaging that comes with the physical card. The box includes information on a wide range of fees – although many don’t apply to Chase Liquid – including charges to get cash back from a purchase, a monthly account maintenance fee and the charge for calling a customer service telephone number.

    For its part, Pew hopes that Chase is just the first of many prepaid card issuers to follow its disclosure recommendations. “Pew’s research shows that inconsistent disclosures make it difficult to understand the fees associated with each prepaid card,” says Susan Weinstock, director of Pew’s safe checking research. “Terms should be plainly stated so that consumers can make fully informed financial decisions. Chase is taking an important step toward making these cards more beneficial and we hope other providers will follow.”

     

     

     

     

     

     

     

     

     

  • Report: African-American and Latino Credit Card Interest Rates Are Higher

    Report: African-American and Latino Credit Card Interest Rates Are Higher

    A new report shows that African-Americans and Latinos pay higher interest rates on their credit card debt than white consumers. According to the research conducted by the National Association for the Advancement of Colored People (NAACP) and the think tank, Demos, Latinos pay an average annual percentage rate (APR) of 17.9 percent.

    By contrast, African-Americans pay an APR of 17.7 percent while white credit card customers pay a 15.8 percent APR. Although the differences seem stark, the report’s authors caution that the gulf between interest rates paid by consumers of different races is within the study’s margin of error and could be statistically insignificant.

    Higher African-American and Latino credit card interest rates are not the only topic addressed in the report, titled The Challenge of Credit Card Debt for the African-American Middle Class. More generally, the report looks at the use of credit cards as a so-called “plastic safety net,” used by families to pay for basic necessities not covered by paychecks. “We find that under difficult economic conditions many African-American families rely on credit cards to make ends meet or invest in their future – despite paying high interest rates and suffering more negative consequences of debt than other groups,” write the report’s authors.

    Other findings in the report are a mixture of good and bad developments. On the positive side, African-Americans have less credit card debt than in 2008. Six years ago the average balance was $6,671, which is almost $1,000 higher than the $5,784 today. Less positive, however, are the credit scores of African-Americans. According to the report, only 42 percent of those surveyed reported having either “good” or “excellent” credit, compared to 74 percent of white households. Far more than other racial groups, African-Americans reported that errors on their credit report contributed to subpar credit scores.

    African-Americans were also more likely to receive calls from bill collectors due to their debt. Over 70 percent of those surveyed reported being called by debt collectors, compared to just 50 percent of white households. As a result of its findings, the research paper’s authors suggest a number of policy changes for lawmakers to consider. In particular, the authors urge expanded federal regulations to address problems faced by middle class Americans of all races in the areas of medical debt, financial and bankruptcy regulations and the calculation and use of credit scores.

     

     

     

     

     

     

     

Prepaid Debit Card Reviews, Complaints, Etc