Prepaid Debit Card Reviews, Complaints, Etc

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  • Prepaid Debit Card Fees Lower Than Checking Account Charges

    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 recent report entitled, “Analysis of General Purpose Reloadable Cards,” found that the majority of consumers using prepaid debit cards are actually faring better when it comes to fees than if they were utilizing more traditional checking accounts. In fact, the report produced by Bretton Woods, Inc. reveals that the majority of people using prepaid debit cards to manage their finances were able to do so for monthly fees totaling less than $7.50, a cost advantage over basic checking accounts.

    The report, which used data gathered from prepaid debit card issuers and program managers, underscores two trends driving the explosive growth of prepaid cards. An important force behind lower prepaid debit card fees is increased industry competition. As large financial services companies like Chase and American Express have introduced products with low fees, competitors have had to follow suit. At the same time, fees associated with checking accounts have been on the rise.

    “The three-year trend shows that the costs of basic checking accounts are increasing while the costs to use general purpose reloadable cards, also known as prepaid debit cards, are decreasing. The 2013 analysis is able to pinpoint with more accuracy what it costs the majority of consumers to use their cards and revealed the high fees incurred by consumers are from outlier cards only and are completely avoidable,” says the report’s author, Michael Flores, who is president of Bretton Woods, Inc.

    The report found that consumers using basic checking accounts pay between $263 and $473 each year in fees. By contrast, those who utilize reloadable prepaid cards with direct deposit pay between $58 and $263.95 each year. Prepaid debit card owners who don’t take advantage of direct deposit, which is typically a free way to load accounts with money, spend between $58 and $333.75 annually. Additionally, the report says that direct deposit checking accounts cost on average more than twice that of prepaid debit cards with direct deposit.

    Another finding of the study underlines the growing popularity of prepaid debit cards with banks. Indeed, almost 60 percent of all banks now offer them. Given the embrace of prepaid debit cards by younger consumers, it’s likely that even more banks will begin offering their own cards. “The trends are unmistakable. General purpose reloadable prepaid cards are serving the needs of Gen Y and the underbanked, and also gaining a foothold with traditionally banked customers,” says Kirsten Trusko, President and Executive Director of the Network Branded Prepaid Card Association.

  • Girl Scouts Embrace Prepaid Cards

    Girl Scouts Embrace Prepaid Cards

    A Girl Scouts chapter strikes a deal with prepaid card company, SpendSmart Payments.

    by Chris Warren

    Thin Mints, Samoas, Tagalongs and Lemonades are definitely not financial terms. Yet the truth is that, aside from fundraising, one of the main reasons Girl Scouts from across the country sell these and other varieties of cookies is to learn something about money management and running a business. Think about it: Successfully selling hundreds or thousands of cookies requires smart marketing and sales strategies, wise inventory management as well as record keeping and order tracking.

    While involvement with the organization’s sprawling cookie business is certainly one way for young girls to become more financially aware and savvy, one Girl Scouts chapter has gone a step further. In October the Charlotte, North Carolina-based Hornets’ Nest chapter announced that it had established a partnership with SpendSmart Payments Co., a financial services outfit and prepaid debit card issuer based in San Diego, California.

    According to a recent story in The Kansas City Star, SpendSmart is crafting a financial education program that will be offered starting in January of 2014 to the 16,000 girls in North and South Carolina who make up the Hornets’ Nest chapter. With materials designed to appeal to girls from kindergarten through high school, the curriculum being developed by SpendSmart is meant to help girls understand the value of money and credit, as well as learn how to budget and use plastic wisely.

    “That last point of emphasis caught my attention,” Kansas City Star reporter Steve Rosen wrote. “As part of its partnership, Scouts 13 and older can sign up for the SpendSmart Prepaid MasterCard.”

    It is understandable why SpendSmart would be eager to become well known by thousands of young girls. The company offers prepaid debit cards specifically designed for teens and parents. Among other features, SpendSmart cards alert parents via text or email whenever a purchase is made, allowing them to monitor how well (or poorly) kids are spending money.

    Rosen points out that SpendSmart charges a $3.95 monthly fee, an amount that is both far higher and lower than other prepaid debit cards. He also notes that prepaid cards like those offered by SpendSmart also charge for withdrawing money from an ATM, replacing a card and checking an account balance. “The upshot: Whether it’s SpendSmart or some other prepaid debit card, weigh the costs against the services provided and decide on the best deal.”

    SpendSmart certainly hopes the Girl Scouts like the cards and the information they’re offering. The company hopes the deal with the Hornets’ Nest chapter is the first of many partnerships with the Girl Scouts.

  • The Occupy Card Moves Ahead

    The Occupy Card Moves Ahead

    The Occupy Money Cooperative needs to raise $900,000 to make its card a reality.

    by Chris Warren

    The Occupy Wall Street Movement’s first steps into the financial services industry have not been particularly smooth. The announcement this past summer that the Occupy Money Cooperative, an offshoot of the anti-status quo coalition that grabbed the world’s attention with its street protests and barbed criticism of banks in the fall of 2011, would attempt to issue a prepaid debit card was an immediate source of fascination.

    Yet when the proposed fees associated with the Occupy Card were unveiled in September, an avalanche of criticism quickly followed. Far from being hailed as a savior riding to the rescue of helpless citizens being preyed upon by the big banks, respected observers like Consumer Reports declared that the card’s fees were worse than many other products already on the market. “Our first look at those proposed fees shows that the Occupy Card needs some work if its sponsors truly want it to be superior to other prepaid cards,” declared the Consumer Reports review.

    Nevertheless, the supporters of the Occupy Money Cooperative appear just as determined as ever to not only launch its prepaid debit card but to revolutionize the banking system. According to an article in the Cornell Daily Sun, the student newspaper at Ithaca, New York’s Cornell University, university professor Robert Hockett is among those working to make the card a reality.

    According to the article by reporter, Helen Donnelly, the Occupy Card will be launched once Hockett and the other co-founders of the Occupy Money Cooperative can raise $900,000 in initial operating capital. The article does not say how close, or far, the group is from reaching that amount.

    Despite its bumpy rollout, Cornell’s Hockett insists that Occupy’s ambitions are still to go well beyond just a prepaid debit card. “The Occupy Money Cooperative is beginning with the debit card. This debit card is a specific counterpart to cards like these that exist in existing banking institutions already offered. Chase Liquid is probably the best-known example,” Hockett told the newspaper. “The ultimate plan is to offer all the other services that these existing banking institutions already do, but on a non-profit basis.”

     

  • Hispanic Consumers Propel Prepaid Card Growth

    Hispanic Consumers Propel Prepaid Card Growth

    Hispanic consumers account for a growing segment of prepaid debit card users.

    by Lucy Lazarony

    Hispanic consumers have embraced prepaid debit cards. According to an August 2012 research study, “Consumer Payments in the U.S.: The Latino Market” by Packaged Facts:

    • There are 4.6 million Latinos who used a prepaid debit card in the last 12 months.
    • They make up 15 percent of all consumers using prepaid debit cards.
    • Between 2011 and 2012, the number of Latinos using prepaid debit cards increased by 7.2 percent from 4.3 million to 4.6 million.
    • It is projected that by 2017 the percentage of Latinos using prepaid cards will increase from 13.8 percent to 16.0 percent and the number of Latinos depending on prepaid debit cards will grow from 4.6 million to 6.3 million for cumulative growth of 35.8 percent.

    The principal source of primary data for the study is the Winter 2012 Experian Simmons National Consumer Study, which was fielded between February 2011 and March 2012.

    Prepaid debit cards targeting Hispanic consumers include the Univision MasterCard prepaid card and The Coopera Card, available through credit unions.

    Miriam De Dios, Chief Executive Officer of Coopera, says prepaid debit cards are good payment options for Hispanic consumers for several reasons.

    “A prepaid reloadable card provides safety, access to new payment methods, can serve as an alternative to check-cashing, buying money orders and using money transfers for the financially excluded and it can be a way to reduce payroll costs for small businesses,” De Dios explains. “However, this product needs to be culturally relevant to Hispanic cardholders and it needs to be a stepping stone into other financial products and services that can help consumers achieve their financial goals. Therefore, credit unions are well suited to offer this product as well as financial education, loans, etc. to help the consumer with more.”

    Likes and dislikes

    According to De Dios, the features of prepaid debit cards that Hispanics like most include being able to open the card without needing a credit history, being able to use the card internationally, and being able to obtain secondary cards for family abroad, and having cardholder support available and accessible in English and Spanish.

    Text message alerts, convenient loading options, and low fees are also popular with Hispanic consumers, De Dios says.

    Turnoffs for Hispanic prepaid debit card users include inconsistent Spanish availability of services and features and too many restrictions to open and obtain a card, De Dios explains.

    Des Moines Metro Credit Union has been offering The Coopera Card since January 2012. The bilingual support (phone and website) is great for our members,” says Traci Stiles, business development manager at Des Moines Metro Credit Union. “They also like the ability to load money from their account over the phone or in person at the credit union. They like to use the card for everyday purchases and online purchases. Also, they use it to pay bills.”

    Forging bonds

    Many Coopera Card users have other services at the credit union as well, Stiles says.  “I think most of our members who have a Coopera Card also have other services with us. We have a Credit Builder Loan that is very popular. Also, many people leave some money in their account for savings,” Stiles says.

    One of the aims of The Coopera Card is to build new financial relationships with Hispanic consumers, De Dios says.

    “We work with credit union issuers across the country and they are integrating this product with their overall product suite and promoting it locally through Spanish media, in an outreach capacity through financial educational opportunities and through partners. Credit unions are also including this in their toolkit as they build relationships with employers with a large number of Hispanic employees and Hispanic-owned businesses.”

  • UN Turns To Prepaid Cards

    UN Turns To Prepaid Cards

    To better aid Syrian refugees, the United Nations is utilizing prepaid debit cards.

    by Shane Tripcony

    By every measure the ongoing civil war raging in Syria has been a humanitarian disaster. The United Nations estimates that over 100,000 people have died in the years long clash between supporters of President Bashar al-Assad and the various factions seeking his ouster.

    Not surprisingly, millions of Syrians have fled the violence that has destroyed cities and towns across the country. An estimated 800,000 Syrians have made the trek to nearby Lebanon, where the United Nations World Food Programme is leading efforts to provide food and water.

    As part of that initiative, the UN Food Programme has reportedly decided to utilize MasterCard prepaid debit cards. According to a story on the website, Mashable, the UN is set to begin distributing the cards; each loaded with $27, with the goal of eventually getting one to each and every refugee. Each month the cards will be reloaded with an additional $27, an amount the UN believes is sufficient to meet the monthly nutritional needs of an individual.

    The distribution of prepaid debit cards, which can be used to buy food from the 300 Lebanese stores that have agreed to accept them, will replace the UN’s use of both pre-packaged rations and paper vouchers.

    UN officials say that the use of prepaid debit cards will provide many benefits. Refugees will no longer have to line up to receive coupons every 30 days and the local economy should get a boost from Syrian purchases. The cards also offer the promise of more self-sufficiency. “They’re just more independent that way,” Bettina Luescher, a spokesperson for the UN World Food Programme told Mashable writer, Colin Daileda. “They can get what they like for their families.”

    The cards are also less susceptible to fraud, a MasterCard executive told Mashable, because they’re easy to track and require a UN issued ID to use. The UN has already piloted the use of prepaid debit cards in Lebanon, albeit with just 10,000 people in one town. But if the card works well in all of Syria, the UN plans to begin distributing them to the 300,000 Syrian refugees currently living in Jordan.

  • Does Your Grandmother Need a Bluebird?

    Does Your Grandmother Need a Bluebird?

    A well-chosen prepaid debit or checking alternative card offers freedom, flexibility and peace of mind to the elderly and their children.

    by Bev O’Shea

    Prepaid debit cards, once the province of the non-creditworthy and desperate, are finally becoming downright respectable (some of them anyway – you still have to be careful). Some cards now specialize; for example, allowance cards and cards for recovering addicts. So far, I haven’t seen suggestions that these should be used for elderly or disabled adults, but the idea seems workable.

    Most are still aimed at what the industry calls “the unbanked.” My guess is that’s not your grandparents. But pair cognitive decline and access to a checking account or credit card, and, well, you can see the potential for disaster.  You may not want to take away credit cards, but you don’t want to leave people you love vulnerable, either. The right prepaid debit card can offer a compromise.

    Shop around and you can find a card that offers sub-accounts and a low (or no) monthly fee. You can both monitor and fund sub-accounts. Check and compare fees because differences can be huge.

    Purchases for more than the amount in the account will not be approved, but the cardholder (say, your grandmother) could shop or buy a meal out. The account owner can opt for real-time text alerts as well. That way, if the card is stolen, unauthorized purchases can be detected right away. You can remove the indignity of constant, obvious monitoring; if monitoring is needed, it can be done discreetly.

    Somehow these bring to mind my grandmother, who wisely put her own father on an allowance the same day he asked for money to buy a newspaper at the corner. He needed pocket change, his own. A prepaid debit card can work much the same way.

    And, unlike a debit card (which can theoretically empty the owner’s checking account if stolen), a prepaid card can be loaded with only the amount you anticipate spending. This can also work as a budgeting tool to impose limits on spending. If self-control or good judgment falls short, the card can keep a budget on track. If the person with the subaccount needs to maintain good credit, there are other ways to do that.  It’s worth noting that prepaid cards do not build credit.

    One candidate for protecting loved ones would be the checking alternative, American Express Bluebird card, which is not technically a prepaid debit card but shares many of the same features. I’m using it now to help a teen learn about budgeting. Once I began using it, I realized that this has the potential to both protect older adults from spending recklessly while also freeing them to use plastic.

    You can buy a kit at Wal-Mart for $5 if you want to load it and use it right away. If you apply online, signup is free. The card can be used anywhere American Express is accepted.

    And no, they didn’t pay me. I just happen to love some people who might need a little protection now and then.

Prepaid Debit Card Reviews, Complaints, Etc