Credit and Debit Card Ratings

A Better Payroll Card – Prepaid Debit Cards Without Victimizing Employees

Big companies like McDonald’s, Taco Bell and Walgreens received a heavy dose of negative press recently – not to mention unwanted attention from New York’s attorney general – when a host of stories appeared highlighting the practice of paying some workers with prepaid debit cards. The stories detailed how large corporations can save a lot of money by replacing direct deposit or paper checks traditionally used to pay wages with prepaid debit cards.

But plenty of workers, many of them earning minimum wage, have complained about the practice, arguing that the fees associated with many prepaid cards take too large of a chunk from their earnings. But the use of prepaid debit cards to pay workers who don’t have traditional bank accounts isn’t necessarily a bad thing.

At least that’s the conclusion reached in an opinion piece published by the American Payroll Association (APA) and the National Consumer Law Center (NCLC), two advocacy groups with very different constituencies. The National Consumer Law Center has been focused on promoting economic security for low-income and other disadvantaged people while the American Payroll Association provides education and training to thousands of payroll professionals. “Though we represent different constituencies (low income consumers and payroll administrators), we agree that payroll cards can offer unbanked workers an economical, safe and convenient way to receive their wages,” write the authors, William Dunn of the APA and Lauren Sanders of the NCLC.

But the two organizations attach a host of caveats to their endorsement of the use of prepaid cards. Among the guidelines the groups suggest for the use of prepaid cards are
these:

• At least once during each pay period employees should be able to access all of their wages without having to pay any fees. That means that workers should be able to go to an ATM, a bank teller or get cash back from a purchase without being hit with a charge.

• Workers should have a choice – be it direct deposit or paper check or prepaid card – about how to receive their pay. They should also be able to change the method of payment when they’d like.

• Employees should be offered a prepaid card that is widely accepted, such as one bearing the Visa, MasterCard or Discover logo. If possible, the cards used should have a large network of surcharge-free ATMs.

• Employers need to provide training about how prepaid debit cards work and what terms are required to understand them so that they can access their money without paying any fees.

Tag: prepaid card

  • A Better Payroll Card – Prepaid Debit Cards Without Victimizing Employees

    A Better Payroll Card – Prepaid Debit Cards Without Victimizing Employees

    Big companies like McDonald’s, Taco Bell and Walgreens received a heavy dose of negative press recently – not to mention unwanted attention from New York’s attorney general – when a host of stories appeared highlighting the practice of paying some workers with prepaid debit cards. The stories detailed how large corporations can save a lot of money by replacing direct deposit or paper checks traditionally used to pay wages with prepaid debit cards.

    But plenty of workers, many of them earning minimum wage, have complained about the practice, arguing that the fees associated with many prepaid cards take too large of a chunk from their earnings. But the use of prepaid debit cards to pay workers who don’t have traditional bank accounts isn’t necessarily a bad thing.

    At least that’s the conclusion reached in an opinion piece published by the American Payroll Association (APA) and the National Consumer Law Center (NCLC), two advocacy groups with very different constituencies. The National Consumer Law Center has been focused on promoting economic security for low-income and other disadvantaged people while the American Payroll Association provides education and training to thousands of payroll professionals. “Though we represent different constituencies (low income consumers and payroll administrators), we agree that payroll cards can offer unbanked workers an economical, safe and convenient way to receive their wages,” write the authors, William Dunn of the APA and Lauren Sanders of the NCLC.

    But the two organizations attach a host of caveats to their endorsement of the use of prepaid cards. Among the guidelines the groups suggest for the use of prepaid cards are
    these:

    • At least once during each pay period employees should be able to access all of their wages without having to pay any fees. That means that workers should be able to go to an ATM, a bank teller or get cash back from a purchase without being hit with a charge.

    • Workers should have a choice – be it direct deposit or paper check or prepaid card – about how to receive their pay. They should also be able to change the method of payment when they’d like.

    • Employees should be offered a prepaid card that is widely accepted, such as one bearing the Visa, MasterCard or Discover logo. If possible, the cards used should have a large network of surcharge-free ATMs.

    • Employers need to provide training about how prepaid debit cards work and what terms are required to understand them so that they can access their money without paying any fees.

  • Consumer Reports Rates Prepaid Cards

    Consumer Reports Rates Prepaid Cards

    When Consumer Reports talk, people listen. Whether it’s cars, refrigerators, electronics or even health care, the evaluations that Consumer Reports and its team of researchers and testers come up with are often the first place shoppers go when they’re trying to make a smart choice among lots of options.

    With the release of its report, “Prepaid Cards: How they Rate on Value, Convenience, Safety and Fee Accessibility and Clarity” in July of 2013, the venerable magazine has now weighed in on the quality (or lack thereof) of many individual cards available on the market. Not surprisingly, of the 26 total cards that were examined, the ones that fared best in the rankings scored well in all four categories. “All the best prepaid cards have few types of fees, and offer consumers opportunities to avoid fees. Each is safe to use, carrying FDIC (Federal Deposit Insurance Corporation) insurance to the individual cardholder,” write the report’s authors. “All are convenient, with functionality that in many ways is on par with a checking account. Consumers looking to acquire these cards will find fee information accessible and easy to understand.”

    Although none of the cards evaluated by Consumer Reports did well enough to garner an “excellent” rating, three of the cards were deemed “very good,” which was sufficient for them to be “recommended.” The three cards earning the Consumer Reports stamp of approval are:

    • The Bluebird with direct deposit from American Express

    • The H&R Block Emerald Prepaid MasterCard

    • The Green Dot Card

    And then there were all of the poorly rated cards. “All of the worst cards have high, unavoidable fees, including activation and monthly fees,” write the report’s authors. “Moreover, consumers are likely to have difficulty finding and understanding what those fees are.” To understand just how wide a variation there was in the overall score of the cards, consider that the top-ranked Bluebird earned 80 points across all four categories. By contrast, the lowest scorer – the American Express for Target card – tallied just 17 points. The three cards that earned the worst marks are:

    • American Express for Target

    • Redpack Mi Promesa Prepaid MasterCard

    • Reach Visa Prepaid Card

    Although Consumer Reports’ policy and advocacy division, Consumers Union, has followed prepaid cards for a number of years now, the organization decided to revisit the topic in more depth recently because of important changes in the marketplace. Perhaps most importantly, Consumer Reports notes that prepaid cards are simply getting more prevalent and popular, citing the fact that prepaid cards were used in 1.3 billion transactions totaling $77 billion in 2012 and by 2014 it is expected that $167 billion will be deposited into prepaid accounts. In addition, the report notes that large financial institutions, such as JP Morgan Chase and U.S. Bank, are now offering lower fee and more transparent cards. “In light of these developments, we decided to evaluate and rate prepaid cards,” says the report.

Credit and Debit Card Ratings