Prepaid Debit Card Reviews, Complaints, Etc

Tag: prepaid card

  • Prepaid Cards For Wisconsin Employees

    Prepaid Cards For Wisconsin Employees

    Earlier this summer there were a series of negative media stories about the practice some companies were embracing of paying employees using prepaid debit cards. A frequently cited story in The New York Times described how companies like McDonald’s, Walgreens and Wal-Mart were eschewing paper checks and direct deposit in favor of prepaid debit cards as the preferred method of compensating employees.

    Reactions to that story in particular – which featured minimum wage workers who expressed frustration over having to pay fees associated with prepaid debit cards in order to access money they earned – were largely critical of the practice. For their part, businesses have opted for prepaid debit cards over paper checks and direct deposit for a very simple reason: it saves them potentially thousands of dollars each year in payroll expenses. Still, the practice has raised enough of an outcry that New York Attorney General Eric Schneiderman opened up an investigation into 20 companies utilizing prepaid debit cards to pay their workers.

    Despite all of the recent bad press around utilizing prepaid debit cards to pay workers, more employers are getting into the act – and what makes it a little bit different is the fact that it’s no longer limited just to the private sector. Indeed, according to a recent report in the Wisconsin State Journal, employees at state agencies there can now be paid via a program called AccelaPay, a prepaid debit card issued by U.S. Bank. According to the story, written by Matthew DeFour, the prepaid debit card payment option is not compulsory, but is instead proposed as a an option for state employees who don’t have a traditional bank account. Explaining the offer, a Wisconsin state official said that it was “a safe, convenient and ‘green’ way to automatically receive and access their paycheck funds. AccelaPay is faster, safe and more secure than a paper check.”

    Nevertheless, according to Marty Beil, the executive director of the state employee union, employees did not ask for the option of receiving their salaries on prepaid debit cards and there is no concern that it will eventually become a requirement. As is the case with most prepaid debit cards, there is also concern about the fees. In the case of AccelaPay, it costs $0.50 for each balance inquiry and $2 for all ATM withdrawals outside the U.S. Bank network. No fees are charged for account inactivity or for making purchases or receiving cash back on purchases.

  • Oakland Issues Hybrid ID – Prepaid Debit Cards

    Oakland Issues Hybrid ID – Prepaid Debit Cards

    by Shane Tripcony

    From a municipal public policy standpoint, Oakland, California’s decision earlier this year to issue identification cards that also act as prepaid debit cards was hailed by some as a double play. For one thing, the decision by Oakland officials to make ID cards bearing a person’s photo, name, address and signature available was a way to provide citizens, both legal and illegal, a route to utilize local government resources, like museums and libraries. In providing this kind of ID card, which can’t be used in lieu of a driver’s license or for air travel, Oakland was following the lead of other cities, such as nearby San Francisco and New Haven, Connecticut.

    But according to a recent article on Governing Magazine’s blog, Oakland is the first city in the nation to provide an option for the users of the municipal ID card to also use them as a prepaid debit card. According to the article by J.B. Wogan, the reason Oakland chose to do this is because of a desire to encourage more low-income residents – typically the segment of the population that does not already have an ID – to have access to traditional banking services. Often, citizens who don’t have bank accounts rely on expensive check-cashing and payday lenders for their financial service needs.

    The Oakland initiative adding a prepaid debit card function to municipal IDs is attractive enough that about 2,000 citizens have already gotten them and cities like Los Angeles and New Haven are considering rolling out their own programs. But not everyone is a fan of the type of prepaid card Oakland makes available to its citizens. In particular, the city is being criticized for what some see as the excessive fees associated with the card. To get the ID, citizens have to pay a flat $15 fee. Once the prepaid debit card function is enabled, users pay a wide range of other fees, including a monthly service fee of $2.99, a point of sale charge of $0.75, $1.50 for in-network ATM cash withdrawals and $2.99 for customer service assistance.

    While these fees are not uncommon in the realm of prepaid debit cards, critics argue that Oakland can and should do better. In an open letter to the National League of Cities, Michelle Jun, a senior attorney with Consumers Union, the policy and advocacy arm of Consumer Reports, expressed concern that city-issued prepaid cards weren’t offering citizens the best possible deal. “We believe that given the position of a municipality as a trusted entity, cities have the added responsibility of providing the most consumer friendly financial products and services,” writes Jun. “We believe the government and other public entities that choose to link a prepaid card option to any card or service provided by a municipality should provide its citizens with an opportunity to access a product or service that is fairly priced and provides the best value to the user.”

    As Wogan points out in his blog, Oakland’s fees are lower-than-average, according to a study done last year by the Pew Charitable Trusts. Still, according to Jun and others, cities issuing prepaid debit cards should ensure that they have as low fees as possible and provide as much protection against loss or fraud as is feasible.

  • Occupy Prepaid Debit Card No Slam Dunk

    Occupy Prepaid Debit Card No Slam Dunk

    When the Occupy Wall Street movement announced its intention to unveil a prepaid debit card this past July, the news stirred plenty of attention. Unsurprisingly, the notion that a group of protesters who directed the bulk of their anger at bankers would enter the financial services industry was too delicious a story for many news outlets to pass up.

    Adding to the allure of the creation of The Occupy Cooperative, which will release the Occupy Card and eventually hopes to offer other banking services to its product line, was the possibility that it could be the start of a shakeup of Wall Street that protests alone could not accomplish. “As we build up the number of users of the card, we shall soon be able to introduce further services that will shake up the current behemoths in the banking sector,” Carne Ross, a founding board member of the Occupy Cooperative, told BestPrepaidDebitCards.com in a recent interview. “These products will serve the same constituency as the card, wherever possible they will bolster the credit unions, provide low-cost choices, bypass the entrenched systems that rip everyone off, and brick-by-brick build alternatives for ordinary folk’s needs.”

    Good intentions and plenty of publicity aside, the Occupy Cooperative faces a tough road ahead. That’s the message of a recent article in Time Magazine entitled “5 Hurdles an “Occupy”-Branded Banking Product Must Clear.” In the story, reporter Martha White identifies a number of challenges Ross and his colleagues will face as they begin their crusade to upend the financial services industry.

    Among the hurdles the Occupy Cooperative must surmount are raising a sufficient amount of start-up capital. In her story, White cites the efforts of Occupy activists in San Francisco, who have tried and failed thus far to cobble together enough cash to launch what’s known as the “People’s Reserve Credit Union.” Also problematic, at least if Occupy intends to act like a regular bank and take deposits and offer loans, are the many, many regulations involved. While the Time article correctly points out that prepaid cards are largely unregulated (at least for now), entering into traditional banking services would require Occupy to buy a bank or credit union, since starting up a new one would mean obtaining a federal or state charter.

    Other challenges Occupy faces also include the need to access the payment system – which costs money – so that cardholders can actually use their plastic and simply being viable financially if, as Ross promises, there are few fees associated with the card. Finally, White uses the example of PerkStreet Financial as a cautionary tale. When PerkStreet launched five years ago, she writes, it promised to upend the banking system by offering consumers such incentives as 2% cash back on debit card purchases. But PerkStreet’s ultra consumer-friendly approach didn’t make it; it will shut down in September. “We tried to change banking, the most broken industry in the country, in the midst of a financial crisis. It was incredibly hard and we were ultimately unsuccessful,” the article quotes PerkStreet CEO Dan O’Malley, from a blog post O’Malley wrote.

    Only time will tell whether Occupy can figure out a way to succeed. Obviously, though, the group that hit the streets to protest inequality and the abuses of the financial system knows better than anybody how hard change can be.

  • Changes To American Express Serve Accounts

    Changes To American Express Serve Accounts

    In the increasingly competitive world of prepaid debit cards, companies are having to scramble to stand out from the crowd. The American Express Serve card has done that thus far by offering a variety of perks – including things like roadside assistance, purchase protection and early access to sporting event and concert tickets – that one would expect from a global financial services company like Amex.

    But the desire to entice more people to sign up for the Serve prepaid debit card is no doubt behind a number of changes American Express announced in mid-August of 2013. While not as glamorous as, say, the chance to snap up good seats to a Dallas Cowboys and Washington Redskins clash, the recent tweaks made to American Express Serve accounts are more substantive and beneficial to regular cardholders.

    Indeed, in the past American Express Serve cardholders were able to replenish their accounts using direct deposit from their employer or by, among other things, accessing funds from a separate debit or credit card account. As of August 13, however, Serve accounts began accepting direct deposit for a variety of payments from the federal government as well, everything from tax deposits to Social Security checks to Worker’s Compensation.

    Another upgrade made to the Serve card involves ATM transactions. Cardholders will now be able to withdraw cash without incurring a fee from more than 22,000 ATMs in the MoneyPass network worldwide. Outside of the MoneyPass network, Serve will charge $2 per withdrawal, which is in addition to any fee levied by the ATM operator.

    Perhaps the most important of the recent changes announced by American Express has to do with Federal Deposit Insurance Corporation (FDIC) insurance. As of August 13, any time a Serve cardholder adds money to their account, American Express quickly places those funds into a so-called custodial account (with either Wells Fargo or American Express Centurion Bank) that has FDIC insurance. The upshot of this is that Serve account holders receive what’s known as FDIC pass-through insurance, meaning that their money (up to $250,000) is protected should a bank fail.

    As competition among prepaid debit card issuers heats up, expect more and more changes and improvements to the standard features companies offer.

  • Celebrity Prepaid Debit Card Smackdown 2013

    Celebrity Prepaid Debit Card Smackdown 2013

    Nobody would argue that hip-hop impresario Russell Simmons is anything but cool. After all, the guy was one of the forces behind Def Jam, the record label that brought us the Beastie Boys and LL Cool J. These days, Simmons is a business magnate whose net worth is estimated to be north of $300 million. And Simmons is looking to add to that sizable fortune by lending his name to a celebrity prepaid debit card called the RushCard. In doing so, Simmons joins personal finance guru Suze Orman and the increasingly notorious singer Justin Bieber in endorsing and promoting celebrity prepaid cards.

    An examination of the fees associated with these three celebrity prepaid cards by BestPrepaidDebitCards.com reveals that it can be a pricey proposition to use star-powered plastic, albeit not always more expensive than average prepaid debit card fees. For instance, while Orman and Bieber charge $3.00 and $3.95, respectively, in standard monthly fees, the tab for Simmons’ celebrity prepaid card is $9.95 – an amount that is more than $5.00 higher than the average monthly fee. To be fair, there are other Rush card offerings with lower monthly fees and may be found in free monthly fees for the Pay As You Go Plan to $5.95 or $7.95 on the Rush Unlimited Plan depending on your direct deposit status.

    In other areas, the fees charged on the celeb-backed cards are comparable, including similar charges for ATM transactions or for putting money into the account (known as loading fees). Consumers should note, however, that although an issuer may not charge a fee to load cash on their card, they may have to utilize third party services which do charge, such as Green Dot MoneyPak or MoneyGram, and fees can range from $3.74 to $4.95.

    An alternative product is Bluebird by American Express, which does not offer star-power, but it does offer great features and very low fees. Still, there’s no getting around the fact that there’s a premium to be paid for associating yourself with a celebrity card. In a hypothetical tally of fees from a month of modest usage of our sample RushCard plan, BestPrepaidDebitCards.com calculated that it would cost a cardholder around $12 per month. Is using a celebrity prepaid card really that cool?

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    An Alternative to Traditional Checking Accounts: Bluebird by American Express

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  • Magic Johnson Stands Up To Cancer With A Prepaid Card

    Magic Johnson Stands Up To Cancer With A Prepaid Card

    Former Los Angeles Lakers great Magic Johnson seems to be just about everywhere these days.If you happen to be a fan of NBA basketball, you no doubt have watched and listened to Johnson provide expert commentary during games televised by ESPN and ABC. And even if you prefer the diamond to the basketball court, you have likely noticed that the Hall of Famer is now one of the owners of baseball’s Los Angeles Dodgers.

    If anything, Johnson has actually surpassed his prowess on the court during his post-NBA years as a businessman. One of Johnson’s more recent ventures is the release of a MAGIC Prepaid MasterCard, one of a growing number of celebrity endorsed prepaid debit cards aimed at garnering a chunk of the quickly growing market.

    While Johnson is certainly throwing his weight behind promoting the card that has his nickname emblazoned on the front – he has recorded a number of online videos pitching the card and its benefits – the MAGIC Prepaid MasterCard is also pitching in to the fight against cancer. Indeed, Magic Johnson’s prepaid debit card is among the family of MasterCard consumer and small business cards that are participating and promoting the “Dig In & Do Good” program. As part of its larger Stand Up to Cancer initiative, MasterCard is donating $.01 to support cancer research every time someone uses MasterCard to pay for a meal costing $10 or more between July 12 and Sept. 28, 2013. MasterCard has committed to donating a total of $4 million.

Prepaid Debit Card Reviews, Complaints, Etc