Prepaid Debit Card Reviews, Complaints, Etc

Tag: prepaid cards

  • The Good, The Bad And The Ugly – Card Purchase Disputes

    The Good, The Bad And The Ugly – Card Purchase Disputes

    Looks can be very deceiving. At least that’s the case should you decide to dispute a purchase you made using a prepaid, debit or credit card. While they can all look like the same hunk of plastic –and function with a quick swipe – there’s a very big difference in the legal and consumer rights that back you up if you are unhappy with the quality of the goods that you purchased and enter into a dispute with a merchant.

    In a nutshell, credit cards offer a lot of protection, debit cards a little and prepaid cards none at all. Indeed, with credit card purchases, you have the full force of the Fair Credit Billing Act on your side. Under the Electronic Fund Transfer Act, which covers debit card transactions, you have limited merchant dispute rights, except for unauthorized transactions. And there are no federal consumer protections for purchases made with prepaid debit cards.
    Let’s take a closer look at each.

    Credit cards
    If you have a beef with the quality of something you bought at a store, it’s best if you made the purchase with a credit card. In fact, when disputing a purchase with a credit card, you can request the card issuer charge back the amount of the purchase to the merchant until the dispute is resolved.

    “On a credit card, you have a big advantage and the best protection due to the Fair Credit Billing Act,” says Mary Ann Campbell, a certified financial planner who teaches personal and family finance at the University of Central Arkansas and runs the web site www.moneymagic.com.“You can file a dispute claim and the charge can be charged back to the merchant until the dispute is decided.”

    Debit cards
    Things aren’t so straightforward when it comes to debit cards. When disputing a purchase with a debit card, your rights under federal law are limited, except for unauthorized purchases made with the card. “Consumers don’t have the same protections in the case of debit cards, which are covered by Regulation E, the Electronic Funds Transfer Act,” says Gerri Detweiler, a credit expert, author and host of Talk Credit Radio. “That law gives the consumer the right to dispute a charge in the case of unauthorized use but that’s it.”

    In other words, your best bet when it comes to disputing a charge with a debit card is if you’re the unfortunate victim of a crime or simply lost your card. Otherwise, if you’re unhappy with the quality of an item purchased with a debit card, it’s up to you to try to get the money refunded to your bank account. “If you pay for an item with a debit card and you’re unhappy with the product, you have to get your money back,” says Beverly Harzog, credit card expert and author of the forthcoming book, “Confessions of a Credit Junkie.” “You’ll need to contact the merchant and see if you can return the product or make an exchange. If you can’t work it out, then contact your financial institution for assistance. You will need to fill out paperwork and it may all work out in the end and you could get your money back. But in the meantime, you don’t have access to the amount of money that’s in the dispute.”

    Prepaid debit cards 
    And then there are prepaid debit cards, which offer no federal protections for disputed charges.“With prepaid cards, you will be stuck with the item or out the money,” says Michelle Jun, senior attorney at Consumers Union. You may reach out to your prepaid debit card issuer for assistance with a merchant dispute. Just be aware that any assistance they offer is voluntary. Also, some prepaid debit card issuers may charge fees for customer service calls.

    No matter the type of card you used to buy something, the first step in resolving a dispute with a merchant is contacting the merchant directly. “Regardless of the type of card you’re using, contact the merchant first and try to resolve your issue,” Campbell says. “Put as much in writing as possible to leave a paper trail of documents that might help you plead your case in the future.”

    The Federal Trade Commission offers consumer tips for resolving complaints with merchants and even includes a sample complaint letter.

    According to the FTC, you will want to:
    • Contact the merchant as soon as possible because some retailers have time limits on returns and refunds.
    • Keep a record of your conversations with the retailer including who you spoke with and when, and what action they promised.
    • Ask for a manager if a store employee or customer service rep doesn’t have the authority to help you.

  • The Battle Over Swipe Fees

    The Battle Over Swipe Fees

    When the so-called Dodd-Frank law passed in 2010, one of its measures was pretty easy to quantify. A sprawling, complicated and controversial piece of legislation aimed at taming the most egregious of abuses perpetrated by the financial services industry in the years before the 2008 financial collapse, Dodd-Frank also addressed the amount of money debit card issuers could charge retailers when a customer made a purchase with plastic. The Federal Reserve was tasked with deciding what the cap should be and eventually settled on a number just below 25 cents per transaction. Estimates on the impact of the ceiling on that fee– known as a swipe fee because it’s a charge that gets racked up when a retailer swipes a card – on banks and card processors come to around $8 billion annually, a hefty chunk of change.

    According to a recent report from Bloomberg News, banks and payment networks are working hard in state capitals around the country in an effort to prevent restaurant and clothing storeowners from charging their clients more to pay their tabs with credit cards than they do for debit card and cash transactions. According to the Bloomberg story, written by reporter Carter Dougherty, banks and their allies have already been successful in banning surcharges on credit card purchases in Utah, and around 20 other states are also considering bills related to swipe fees.

    In a nutshell, what the legislative initiatives in Utah and other states is aimed at doing is preventing retailers from urging – particularly through the use of surcharges – their customers from opting for cash or debit cards over credit. At issue, of course, is money. Banks and card processors are eager to keep as many customers as possible in the habit of using their credit cards when they buy a meal or an iPod; according to the Bloomberg report, card issuers earn between 1 and 3 percent of a transaction whenever someone uses their Visa, MasterCard or American Express card.

    Not surprisingly, retailers want to see swipe fees associated with credit cards as low as possible, contending that they are already too much of an unfair cash cow for banks. “I view the banks and credit-card companies as unwanted business partners. They do not work anywhere near as hard as I do, yet they collect nearly as much in fees as the average restaurant earns in profit,” wrote Ted Burke, the co-owner of the Shadowbrook Restaurant in Capitola, California, in the San Francisco Chronicle. “Business owners like me can negotiate virtually all of our costs, but we are powerless to negotiate swipe fees.” If banks and card processors are successful on the state level, many retailers also won’t be able to encourage customers to opt for lower fee debit cards. Under federal law, business a credit card transaction can cost a consumer more than a debit or cash purchase.

  • Money Management Made Easy Using Prepaid Debit Cards

    Money Management Made Easy Using Prepaid Debit Cards

    How prepaid debit cards can help keep you on budget and in control of your finances

    They’re the kind of stories that make people shake their heads in disbelief. Layered with no small amount of schadenfreude, these are the tales of talented athletes whose prowess on the field and court earn them both adulation from fans and millions of dollars per year. Yet somehow, through horrific spending habits and bad advice, all of those millions disappear. ESPN recently aired a documentary, appropriately titled “Broke,” chronicling the commonplace financial problems of once wealthy athletes, which included a stunning list of athletes who have declared bankruptcy: names like Mike Tyson, Dorothy Hamill, Derrick Coleman, Bill Buckner and many, many more.

    While it’s easy enough to cluck disapproval about the profligate ways of pampered sports stars, the unfortunate reality is that the bad financial habits that lead people like Terrell Owens to go broke are just as common among the less well known and well paid among us. And in fact, while there may be less zeros involved with the debts, there are plenty of people who chronically spend more than they make. One of the main culprits that allow that sort of bad behavior to spiral out of control, of course, is the credit card. Indeed, convenient and necessary as they might be, credit cards are all too often the bane of sound money management.

    This all may sound like familiar territory, but given the rampant problem of indebtedness in this country it’s worth revisiting. As anyone who has ever had one knows well, credit cards have a limit, the maximum amount you can charge. But let’s be honest: credit card limits aren’t individually tailored to your financial situation and there are rarely instances when people can afford to bump up against their credit limits. And if you’ve reached that point, you’re already doing damage to your credit, a signal to lenders that they should jack up the interest rate they charge you on mortgages and car loans because you just might not have the money to repay them.

    Sometimes, good money management – which, in the end, is all about not spending more than you have – requires a little tough love. Which is where prepaid debit cards come in. The reason prepaid cards won’t get you into the kind of trouble a credit card with a high limit can is deceptively simple: there’s no borrowing (that is, credit) involved. In other words, a prepaid debit card forces you to live within your means because it only allows you to spend money that you have already earned and used to fund, or load, the card. You can’t put money on the card unless you have the money in the first place. In a way, it’s like awarding yourself an allowance.

    There are other ways a prepaid debit card aids the money manager lurking somewhere inside us all. Knowledge truly is power when it comes to managing your finances. For one thing, you can easily keep track of your prepaid card balance online or on your smart phone. A prepaid card can also be an enormous help in crafting a family budget. Take the time to review a month’s spending on your prepaid card. Who knew you were spending $10 a week on sodas? Well, now you do, and that knowledge should help you devise a budget that reflects your priorities.

    There are other, less obvious ways that a prepaid card can help with money management. Cash flow is an important aspect of sound finances and prepaid debit cards can be helpful in aiding the swift delivery of income tax refunds for those who don’t have bank accounts. According to the Federal Deposit Insurance Corporation (FDIC), about 30 million American households don’t have bank accounts. If someone has a bank account and opts to get their refund deposited directly, they can expect to wait about two weeks from the time they file their return. But if they have no choice but to wait for a paper check, it takes 6 to 8 weeks for a refund to arrive. By contrast, people with prepaid cards, whether they have bank accounts or not, can get their tax refund deposited almost immediately, eliminating the need for any more refund-anticipation loans.

    Prepaid cards aren’t perfect, of course. And while prepaid debit card issuers charge fees, you can still get a card with minimal fees by shopping carefully. “Some prepaid debit cards are loaded with fees than can often resemble a minefield. There are, however, prepaid debit cards that have very few fees. Comparison shopping for prepaid debit cards is more important than almost any other financial-services product because you can, in fact, save hundreds of dollars each year by choosing a fee-friendly version,” says John Ulzheimer, president of consumer education at SmartCredit.com.

    Who knows, if Terrell Owens or Bernie Kosar or any of the other athletes who have had financial problems had been using prepaid debit cards they might be remembered today only for their athletic achievements.

Prepaid Debit Card Reviews, Complaints, Etc