Prepaid Debit Card Reviews, Complaints, Etc

Tag: featured

Job Corps Debit Card Use Squanders Millions

A new report from the Department of Labor’s Office of Inspector General concluded that prepaid debit cards issued by the Job Corps were misused to the tune of millions of dollars. The Job Corps is a federal agency that provides vocational training and education for young people, especially those deemed to be disadvantaged.

As part of the mission to better prepare young people for employment, the Job Corps picks up the tab for certain travel expenses, including checked baggage fees and meals. In order to cover those expenses, the Job Corps issues prepaid debit cards to the young people it assists. In the period between July 2011 and June 2012, the Job Corps purchased over $21 million via prepaid cards in order to pay for travel and other expenses for young people traveling to and from 125 Job Corps centers across the country.

The Office of Inspector General’s report details widespread misuse of the cards distributed by the Job Corps. In particular, the audit found that the prepaid cards were being used to purchase personal items and to pay for unnecessarily expensive travel. In addition, the report found that hundreds of thousands of dollars were squandered because the government paid excessively high fees associated with prepaid cards and because numerous cards had balances that remained unused. In total, the Office of Inspector General determined that $5.1 million in Job Corps funds had been misused.

The investigation was launched in May of 2012, after allegations surfaced that a Miami Job Corps employee had used hundreds of prepaid cards meant for young people to make personal purchases. The audit was launched in order to answer this question: Were all student travel expenses claimed by Job Corps centers allowable and in accordance with applicable policies and requirements?

The answer to that question was a resounding no. The Office of Inspector General report recommends that the Labor Department’s Assistant Secretary for Employment and Training, who oversees the Job Corps, require new internal controls to ensure that public money is no longer misappropriated.

May 9, 2014
Data Breach Forces Target CEO Out

It was just too much to recover from, in the end. On May 5, Target announced that Gregg Steinhafel, the company’s president, CEO and chairman of the board of directors, would resign immediately. The move ended a three-decade-plus career at the retailer as well as a months-long effort to lead Target beyond the many problems that crept up after a data breach impacted tens of millions of customers last December. Target’s chief financial officer, John Mulligan, was appointed interim president and CEO.

In a statement that lauded Steinhafel’s long tenure at Target, the company’s board made it clear that it was time for a change. “After extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target,” says the statement. In its statement, Target also said that Steinhafel not only led the response to the data breach but also held himself “personally accountable and pledged that Target would emerge a better company.”

Some observers believe that, even though his continued leadership proved unworkable, Steinhafel has done just that. In an article on MarketWatch, writer Philip van Doorn said it was ironic that Steinhafel was being ousted because of the ongoing impact of the data breach even though Target is “leading the way in upgrading payment security for consumers.”

Indeed, as van Doorn points out, Target announced last month that its efforts to implement far superior chip-and-PIN technology for its store-branded credit cards will be completed by early 2015. “In addition to implementing chip-and-PIN verification for its store-branded cards, Target will complete the installation of devices for the use of chip-and signature and chip-and-PIN verification for non-Target credit cards in September, with the software in place in early 2015,” writes van Doorn.

May 6, 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
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
Prepaid Card Use Continues To Grow

This page is no longer active. Please click here for our latest prepaid debit card reviews.

April 30, 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