Prepaid Debit Card Reviews, Complaints, Etc

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AmEx Serve Cards Announcement Hits Green Dot

When American Express announced earlier this week that its prepaid Serve cards can now be purchased at 4,100 Walmarts nationwide, the stock market reacted. But as a story on ABC News points out, Wall Street was mostly interested in what the partnership means for Green Dot, a major player in the prepaid card industry.

And if the immediate aftermath of this major expansion in the availability of Serve cards to Walmart is any indication, Wall Street believes that Green Dot is in trouble. Indeed, in the two days after AmEx announced that Walmart shoppers could pick up its ultra low-fee Serve cards for $1.95 while buying groceries, Green Dot shares were down over eight percent.

As the ABC News report makes clear, this is just the latest downturn in what has been a steep decline in Wall Street’s assessment of Green Dot. Not long after Green Dot held its initial public offering in 2010, it soared to over $60 per share. The company’s shares were trading at below $20 after the Serve announcement, which also included the news that the addition of thousands of Walmarts had helped AmEx create the largest free cash reload network in America.

What’s behind this grim assessment of Green Dot’s prospects? According to Yahoo! Finance’s Mike Santoli, it comes down to competition. “Their whole business is being threatened because they collect prepaid fees off of these debit cards,” Santoli told ABC News. And the fee comparison doesn’t bode well for Green Dot. Consumers can pick up an AmEx Serve card and pay a $1 monthly fee compared to an average $5.95 monthly fee for Green Dot cards.

There’s also a perception problem for Green Dot, argues Santoli. Both AmEx and Green Dot prepaid cards are available at Walmart. “The perception here is that Walmart is throwing its weight a little bit more behind AmEx than Green Dot,” he says.

April 24, 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
Plastic For Pot Purchases

In the beginning, it was all about green. Yes, when Colorado legalized the sale and use of marijuana for recreational use at the beginning of 2014, most people immediately thought of the leafy green plant that had previously been illegal to smoke or eat.

But once the reality that the availability of recreational marijuana presented a multi-billion dollar industry sunk in, a different kind of green became just as important: money. And that turned out to be a problem. Although marijuana sales were deemed legal in Colorado, the federal government maintains its prohibition on the sale and use of pot. Because of that, and because of the reluctance of big financial services companies like Visa and MasterCard to anger the feds, cash became king for marijuana purchases. But the green for green transactions have undoubtedly put a damper on business; customers who have to carry dollar bills frequently buy less than they would if they could use a credit or debit card.

But the use of plastic for pot purchases seems to be gaining momentum. Earlier this year The Denver Post reported that Visa and MasterCard were leaving it up to local merchant banks to decide whether or not to process marijuana purchases using credit and debit cards bearing their logos.

Then on April 15 MJ Merchant Solutions, a Denver-based provider of electronic payment processing services to businesses, announced the release of an end-to-end solution for recreational and medical marijuana dispensaries to accept credit, debit and prepaid debit cards. According to MJ Merchant Solutions’ director of marketing, Kenneth Cade, this new rollout will be a boon to marijuana retailers. “Credit card processing will reduce the number of cash transactions, saving dispensaries in labor costs, reducing the risk of theft and loss, as well as automating, expediting and making the check-out process more convenient for the consumer,” he says.

Not coincidentally, this move is also about green. According to Cade, medical marijuana dispensaries conducted $2 billion in cash transactions, an amount that doesn’t include recreational pot use. MJ Merchants Solutions expects there will be $50 billion in legal marijuana sales over the next six years. By making a move to become the payment processor of choice in the marijuana world, the company undoubtedly hopes that a lot of that green will be coming its way.

April 18, 2014
Debit Cards Reduce Crime

Long before the debate around the wisdom and fairness of using prepaid debit cards to pay employee salaries began, recipients of welfare and food stamps made the switch from paper checks to plastic. A new study has found that the transition yielded this surprising result: Debit cards reduce crime.

A recent story in The Chicago Tribune highlights research conducted by Richard Wright, a University of Missouri at St. Louis criminology professor. What Wright and his team of researchers discovered is that replacing paper checks that recipients – many of whom did not have bank accounts – had to cash at check cashing outlets with debit cards reduced the overall crime rate in Missouri by almost 10 percent.

“We saw this astounding reduction; we were surprised ourselves,” Wright told the newspaper. “Name a policing strategy that led to 10 percent reduction in overall street crime?”

Once explained, the reason for this dramatic drop in crime seems obvious. Recipients of paper checks who went to check cashing stores walked out with cash in their pockets. Having a sizable amount of cash on them made them prime targets for robbers. The introduction of debit cards, says Wright, took a lot of that cash out of circulation and made people less vulnerable to crime. Indeed, Wright’s study found that burglary, assault and larceny fell by 7.9 percent, 12.5 percent and 9.6 percent, respectively.

Wright’s study is the first of its type and he now hopes to expand his research to see if the substitution of debit cards for welfare checks has had the same impact nationally.

April 15, 2014
In-case you missed it… Stories of Interest: 4/11/2014

In-case you missed it; The best from the world of personal finance blogs – all in one place

Financial lessons from “Downton Abbey”

There are plenty of people – Anglophiles and lovers of tawdry storylines, in particular – who just can’t get enough of “Downton Abbey.” But for Money Crashers writer, Jacqueline Curtis, the long-running show can actually provide a sober financial education to go along with its pure entertainment value.

At least that’s the conceit of her delightful recent story, “9 Financial Lessons to Learn From Downton Abbey,” which, it should be noted, contains spoilers. And in truth, observant viewers can take some timeless tips from what the Crawleys do right and, mostly, wrong. For instance, the ups and downs and plot twists that make “Downton Abbey” so fun to watch can also be a reminder to, as Curtis puts it, prepare for anything and everything. Although we’re living in the 21^st century, that credo is meant to push people towards checking or rechecking their emergency savings and health and life insurance policies.

Other good advice to emerge from “Downton Abbey” includes avoiding any kind of investment that promises to be a sure thing and the eternal truth that ignoring financial problems won’t make them go away. I’m sure even Curtis wouldn’t argue that her observations are more entertaining than the show. But she certainly managed to draw some helpful messages from an unlikely source.

Source: 9 Financial Lessons to Learn from “Downton Abbey” (Spoiler Alert) by Jacqueline Curtis on MoneyCrashers.com

Is Your Personal Finance Adviser Scamming You? Four Ways to Tell

It’s completely understandable for people to seek out the help of a professional financial advisor. Most of us have such jam-packed lives that there’s little time, and even less inclination, to learn what is necessary to manage our retirement, education, vacation, or new car or house savings. And while most financial advisors are honest and intend to help you reach your goals, humans are humans, which means there are some scammers out there.

Helping you avoid predatory advisors is exactly what blogger Trent Hamm sets out to do in his recent post, “4 Ways to Tell That Your Personal Finance Advisor is Scamming You.” Appearing both on Hamm’s blog, The Simple Dollar, as well as U.S. News and World Report Money. Among Hamm’s solid tips are to listen carefully to what he or she focuses on in your discussions. “The foundation of every recommendation a good advisor makes is on some aspect of your financial situation,” he writes. “They should be leading with you at all times.”

Hamm provides other pointers, such as asking specifically about an advisor’s fee structure and how they make money as well as proving why they think an investment is the best option. Hamm’s overall post is a good reminder that we all still have personal responsibility for meeting our financial goals, even when we let a professional take the lead.

Source: 4 Ways to Tell That Your Personal Finance Advisor is Scamming You By Trent at TheSimpleDollar.com

Starving players? College athletes often go to bed hungry due to money issues.

While it’s not exactly a story about personal finance or investing, a story in The Washington Post the day after the University of Connecticut won the NCAA men’s basketball championship caught our eye. The story, “National Champ U-Conn’s Napier Says He Goes to Bed Starving,” was written by Soraya Nadia McDonald and, well, the title pretty much says it all. Because Huskies’ star point guard Shabazz Napier is a student athlete and amateur, he says he often goes to bed hungry because he can’t afford food.

The comments come at a time when the issue of whether college athletes can unionize and receive compensation is hotter than ever. Last month a National Labor Relations Board official in Chicago ruled that Northwestern University football players are employees of the school and therefore eligible to unionize. The issue of collegiate athletes getting money for their time on the court or the field is not one that will go away anytime soon. For his part, though, Napier has established himself as enough of an NBA prospect that it’s doubtful he’ll have to go to be hungry much longer.

Source: National champ U-Conn.’s Napier says he goes to bed starving By Soraya Nadia McDonald on The Washington Post

April 10, 2014
Bankrate Surveys Prepaid Cards
One indication of the mainstreaming of prepaid debit cards is the amount of attention these once fringe financial products are attracting from the media. The most recent example of that is an in-depth survey of the fee structures of 30 prepaid cards by Bankrate.com, a leading personal finance website.

Released on April 7^th, Bankrate’s analysis of the leading prepaid cards finds a wide range in the types and levels of fees charged. “Not all prepaid cards are created equal,” says Greg McBride, the chief financial analyst for Bankrate. “Some have many fees, some have few; some will waive or reduce monthly fees, others won’t; some permit free in-network ATM withdrawals, others don’t.”

Bankrate’s evaluation of prepaid cards comes in the wake of research earlier this year by the Pew Charitable Trusts that found that even though prepaid cards are rising in popularity, consumer protections remain limited. Which is one reason why analysis of card fees by the likes of Bankrate is so important in order to arm consumers with the information they need to make smart choices.

Among Bankrate’s findings were:
- Activation fees are still common, with over 50 percent of the cards surveyed charging between $2.95 and $9.95.
- Monthly account fees are hard to avoid. Over 80 percent of the cards examined charged some sort of monthly fee, although a third either don’t have one or will waive it if enough money is deposited into an account.
- It’s best to find a card that has an ATM network. Of those that are affiliated with an ATM network, over 60 percent don’t charge for in-network withdrawals. Those that do, charge between $1 and $2.50 per transaction.
- Checking your account balance at an ATM is a bad idea. Almost 80 percent of the cards Bankrate looked at charge a fee, as high as $3, for this basic information.
- Paying your bills is free. None of the 30 cards Bankrate looked at charged a fee for their bill pay function.
- Find another card if yours charges a point of sale fee. These are a rarity now, with only 17 percent charging for PIN transactions and 7 percent for signature purchases.
April 9, 2014