Prepaid Debit Card Reviews, Complaints, Etc

Tag: what is a prepaid credit card

  • 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.

  • Study Shows Prepaid Growth – Prepaid Cards Multiplying Rapidly

    Study Shows Prepaid Growth – Prepaid Cards Multiplying Rapidly

    The eighth installment of the Debit Issuer Study was released in July and the results
    reaffirmed what many observers can plainly see: prepaid cards are multiplying at a rapid
    rate. Commissioned by the ATM/debit network PULSE, a Discover Financial Services
    Company, and conducted by the consulting group Oliver Wyman, the annual study took
    the pulse of 64 large banks, credit unions and community banks to better understand both
    their current activities and plans for the massive debit market.

    In general, what the study found was that most financial institutions have already
    embraced prepaid cards in one form or another. Indeed, fully 84% of the study’s
    participants – which collectively represent almost half of all debit transactions in the U.S.
    – offer a prepaid card. Typically, the most popular cards offered are gift cards, which are
    sold by 73% of issuers. But the study’s authors also note that financial institution’s
    attitudes towards gift cards – which have weak sales – are indifferent at best.

    By stark contrast, re-loadable prepaid debit cards are soaring in popularity. In fact,
    between 2011 and 2012 the number of financial institutions offering them nearly
    doubled, going from 19% to 36%. That rapid growth can be easily explained by study
    participant’s expectations for 2013 prepaid card sales. Although respondents project that
    gift card sales will slump by 2% in 2013, they anticipate 55% year-over-year growth for
    re-loadable prepaid cards.

    Naturally, the PULSE study also closely examined the state of debit cards. Although
    changes to the law have put a ceiling on fees – known as interchange rates – that can be
    charged when consumers use a debit card for either a PIN purchase or one that requires a
    signature, the debit market continues to grow. “Even in the face of significant regulatory
    challenges, issuers managed to grow their debit volumes in 2012 and expect further
    growth this year,” says Steve Sievert, executive vice president of marketing and
    communications for PULSE.

    Overall, survey respondents saw a 14% increase in PIN transactions and a 6% hike in
    signature purchases in 2012. Looking to 2013, financial institutions expect 8% and 4%
    increases, respectively. “Issuers are more tepid in their outlook for debit. They still expect
    the industry to grow, just not as rapidly as in the past,” says Tony Hayes, a partner at
    Oliver Wyman, who co-led the study. “In fact, this is the lowest growth project for
    signature debit we’ve seen since the study began.”

  • 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.

Prepaid Debit Card Reviews, Complaints, Etc