Prepaid Debit Card Reviews, Complaints, Etc

Tag: prepaid debit cards

  • Employers Cannot Mandate Prepaid Cards For Wages

    Employers Cannot Mandate Prepaid Cards For Wages

    Responding to complaints, the Consumer Financial Protection Bureau (CFPB) issued a reminder to employees that they cannot force workers to accept pay on prepaid debit cards.

    by Shane Tripcony

    Over the summer the practice of using prepaid debit cards to pay employee salaries garnered a lot of attention, much of it negative. News outlets, The New York Times, Time Magazine and Businessweek, report that employees of large companies such as McDonald’s and Time Warner Cable complained that they were being forced to accept wages deposited onto a prepaid debit card. They were not offered the option of a paper check or direct deposit.

    Employees, many of them earning minimum wage, argued that payment via prepaid debit card meant they were losing a chunk of their salary to a range of the standard fees associated with prepaid debit cards. In response to the outcry, New York Attorney General, Eric Schneiderman, launched an investigation into rules around the use of prepaid debit cards to pay salaries that were being broken. As part of that effort, Schneiderman requested information from 42 companies doing business in New York – including Sears, Home Depot and Walgreen’s – about their use of prepaid cards to meet payroll. “No worker should have to accept a form of payment that reduces take-home pay and leads to hundreds of dollars in fees,” Schneiderman told NBC News.

    Now Schneiderman is receiving support from the federal government. Last month the Consumer Financial Protection Bureau (CFPB) issued a bulletin reminding employers that they cannot require employees to receive wages on a prepaid debit card. “Today’s release warns employers that they cannot mandate that their employees receive wages on a payroll card,” CFPB Director Rich Cordray said in a statement. “And for those employees who choose to receive wages on a payroll card, they are entitled to certain federal protections.

    In its statement, the CFPB declared that the use of prepaid debit cards to pay wages falls under its jurisdiction under the Electronic Fund Transfer Act and Regulation E. These provisions outline a number of employee protections specific to prepaid debit cards. Among them are written disclosures of all fees related to the cards, access to account history and limited liability in the case of unauthorized use of a card.

    In making its declaration concerning employers’ use of prepaid debit cards, the CFPB announced its intention to aggressively enforce the rules. “The Bureau intends to use its enforcement authority to stop violations before they grow into systemic problems, maximize remediation to consumers, and deter future violations,” reads a statement from the CFPB.

     

  • 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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  • Best Prepaid Debit Cards.com Launches New Infographics Section

    Best Prepaid Debit Cards.com Launches New Infographics Section

    Best Prepaid Debit Cards.com recently launched a new infographics section in their Resources & Learning Center category. Our hand-selected or custom-designed infographics are an interesting, educational and entertaining way to pass along consumer personal finance information. We started the section with the first post about the Prepaid Debit Card Market in the U.S. Our first custom infographic educates consumers about celebrity prepaid debit cards and fees that may be attached. How do celebrity cards compare to other bank cards? You decide.

    Take a look at our Infographics page here. Check back as we will be adding new graphics all the time.

  • Paying to Get Paid: Employee Costs with Employer Prepaid Card Programs

    Paying to Get Paid: Employee Costs with Employer Prepaid Card Programs

    One of the most common messages you’ll hear about prepaid debit cards these days – including here on this very site – is that they have changed significantly in recent times. In the past, prepaid debit cards were considered suitable only for millions of so-called “unbanked” Americans, those whose credit wasn’t good enough to qualify them for a traditional checking account or credit card. For a variety of reasons, however, the demand for prepaid debit cards has shifted decidedly toward mainstream consumers.

    This has been a good thing both for existing prepaid debit card customers and newcomers because increased demand has prompted large financial players like Wells Fargo, JP Morgan Chase and American Express to jump into the market. Long derided for excessive fees targeted at the most financially vulnerable Americans, prepaid debit cards as a category have certainly improved thanks to increased competition – fees are generally lower and more competitive, and some card issuers even offer consumer protection in the event a card is lost or stolen. Taken together, these developments have spawned some favorable press coverage.

    But by no means is all of the attention glowing. In late June and early July of 2013, thanks largely to a lengthy story in The New York Times, the practice of paying worker wages via a prepaid debit card has come under increased scrutiny. According to the report in the Times – and subsequent coverage in and Businessweek – large employers including Wal-Mart Stores, McDonald’s and Time Warner Cable are eschewing traditional paper paychecks and direct deposit in favor of paying wages on prepaid debit cards. The article in the Times, written by reporters Jessica Silver-Greenberg and Stephanie Clifford, quoted numerous workers, some earning minimum wage, who complained that excessive fees were eating into their already low wages. Additionally, workers interviewed said that they were not given the option to receive either a paper check or direct deposit.

    The reason some large employers have embraced prepaid debit cards as a way to pay workers is simple. It saves them money. Time Magazine, citing a calculation done on Visa’s payroll card , reported that a company with 250 employees getting paid every other week could save $10,600 annually in payroll processing costs by using prepaid cards.

    This spate of attention has already spawned an investigation. In early July New York Attorney General Eric Schneiderman initiated an inquiry into 20 companies that may be routinely using prepaid debit cards to pay their employees; a practice that has to receive written employee consent. Businessweek quoted a letter Schneiderman’s office sent to the companies. “We are concerned about excessive or insufficiently disclosed fees which may unduly reduce employees’ take-home pay.”

  • Getting A Prepaid Card In Your Wallet

    Getting A Prepaid Card In Your Wallet

    In his fascinating book, The Paradox of Choice, author Barry Schwartz goes to great length to point out that an abundance of options – whether it’s in choosing a doctor, ordering a coffee or selecting a college – can actually make us miserable. A gross oversimplification of Schwartz’s book is this: having too many choices can make us always question our eventual selection and blame ourselves for any sort of failure related to it.

    Here at BestPrepaidDebitCards.com, our aim is to provide you with enough information so that the choice you make when it comes to a prepaid debit card doesn’t generate the sort of angst Schwartz writes so intriguingly about. And to be sure, the market for prepaid debit cards has grown so sprawling that an overabundance of choices already exists. To obtain a card, you have to compare annual fees, usage limits, reloading fees, and ATM withdrawal limits. Many merchants, including grocery stores, drug stores, big box retailers like Walmart and major banks like Chase and Wells Fargo now offer their own branded prepaid debit cards.

    While we certainly do our best to make sure you don’t fall victim to the buyer’s remorse and self-doubt that Schwartz writes about, here’s a little good news: once you actually make a decision to get a particular card, actually obtaining it as a snap. Indeed, most online application forms for the major prepaid debit cards are simple and getting a card on-site at a retailer will require only a few minutes of your time.

    Part of the reason the application process is so easy and painless is because of what you don’t need. Remember, prepaid debit cards are funded by you in advance; they’re not credit cards, where the issuer is allowing you to borrow potentially thousands of dollars, which they expect you to pay back. Because of that dynamic, prepaid debit card issuers don’t need to comb through your past to see how reliable you have been in paying off old debts. Your credit history just doesn’t matter because the money you’ll be using is cash you’ve already earned. The fact that applicants don’t need a pristine credit history makes prepaid debit cards a boon to parents who want them for their teenagers, college students, and workers without bank accounts. The only thing you will really need to get a card is a form of identification, like a driver’s license or a passport. If you are under age 18, you’ll need parental permission. Because of that very low bar, and unlike a credit card, you can get a debit card immediately if you buy it from a local merchant.

    Ordering the card online means that it may take a few days to a week to arrive. That delay can be important, depending on what you need the card for. For instance, if you are planning to use it on a trip, be sure to build in enough time so that the card arrives before you take off. And also remember that you’re not just tying up the funds you put on the card. Most prepaid debit cards are not afforded the same consumer protection as credit cards under the Fair Credit Billing Act, so fees to maintain them can eat into the account funds, even when it’s not actually in your hands.

    Still, these are fairly minor considerations, especially given the overwhelming task of actually choosing the right prepaid debit card in the first place. But at least obtaining the card is a welcome break from the paradox of choice.

  • Consumers Turning to Prepaid Debit Cards Now More Than Ever

    Consumers Turning to Prepaid Debit Cards Now More Than Ever

    With tighter consumer regulations and the low-interest rate environment, banks have had to find new and innovative ways to make a profit. This led to higher fees and the end of “free checking” in some cases.  This move caused many consumers to avoid bank accounts altogether.  According to the October 2011 report “Still Risky:  Bank Fees and Disclosures in the States” by The Pew Charitable Trusts, 89% of the checking accounts offered at the 12 largest U. S. institutions involve bank fees.

    In the wake of the Card Act, a lot of credit card issuers were proactively discarding their customers for becoming too risky.  According to the Federal Reserve Flow of Funds report, the credit growth in America has declined from 9.6% in 2006 during the height of the credit boom to negative 2.2% in 2010 and has remained low ever since.  Now, the market flooded with consumers hooked on the ease, security and convenience of plastic, these customers needed an outlet.  This niche was then filled by a number of companies who created the prepaid debit card.

    Prepaid debit cards allow consumers to avoid both the credit card related fees and interest rates as well as the bank related fees, all while enjoying the convenience and flexibility of being able to access/load their cards at over 60,000 retail outlets across the United States.  Their funds are available in real time and retail outlets keep much better hours than traditional banks.

    According to the Federal Reserve Payments Study in 2010, prepaid cards are the highest-growth noncash payments in America.  Prepaid debit card have quickly become America’s favorite piece of plastic.

    For more information on this story, visit:  http://www.foxbusiness.com/personal-finance/2013/04/23/why-consumers-flock-to-prepaid-debit-cards/

    For more from this author visit:  Tameka Riley's Author Page

Prepaid Debit Card Reviews, Complaints, Etc