Prepaid Debit Card Reviews, Complaints, Etc

Tag: Pew Charitable Trusts

Visa Attacks Prepaid Fee Confusion

It’s getting harder and harder for prepaid card issuers to be sneaky about their fees. Earlier this year the Pew Charitable Trusts issued a report detailing the lack of uniformity when it comes to prepaid fee disclosures and proposed a model disclosure box to make it easy for consumers to compare the fees associated with different products. Soon after that announcement, Chase declared that its Chase Liquid Prepaid Card would adopt Pew’s disclosure suggestions.

On June 3^rd, Visa decided to weigh in on the prepaid fee disclosure issue. Working in conjunction with Pew and the Center for Financial Services Innovation, Visa announced that it has developed an easily understandable designation for consumers to look for in order to know quickly whether a prepaid card meets certain standards related to fees, disclosure and benefits. Prepaid card issuers that qualify can include a seal on their packaging and marketing materials that indicate their compliance with certain criteria. Think of it as a prepaid version of the “fair trade” sticker that graces coffee packaging.

“We felt it was important to go beyond current requirements in the marketplace and bring transparency to this growing product area,” says Ryan McInerney, president of Visa Inc. “This Visa designation will signify a new level of simplicity, protection and opportunity, enabling cardholders to confidently manage their spending every day.”

In order to qualify for the Visa designation, prepaid cards must meet a variety of standards such as offering a flat monthly fee that includes all day-to-day uses for the card. In other words, there are a lot of things that prepaid card issuers can’t charge for, such as point of service (POS) cash back, in-network ATM transactions, PIN or signature transaction fees and customer service or overdraft fees.

Additionally, qualifying cards must also offer specific consumer protections. Among other things, to receive a seal of approval cards have to include FDIC insurance, dispute resolution rights and Visa’s zero liability coverage.

According to Pew’s Susan Weinstock, who directs the group’s consumer banking initiatives, Visa’s move is important. “Visa is taking an important step forward by acknowledging the importance of clear disclosures and consumer protections,” she says. “It’s particularly encouraging that Visa is not allowing overdrafts on these cards, in light of our research on consumer prepaid card use.”

June 5, 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
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