Matt Rourke/APPrepaid debit cards are the fastest growing of all electronic payments, according to the Federal Reserve System.
There’s a new kind of plastic on the rise.
Prepaid debit cards are the fastest growing of all electronic payments, according to a new report by the Federal Reserve System. U.S. consumers loaded $28.6 billion on reloadable prepaid debit cards last year — more than double what they did in 2007. [Well, of course, check out how much money Meta Bank and their representative sitting on the newly formed Network Branded Prepaid Card Association paid to Rupli and Associates to represent their interests in the US House of Representatives and in the US Senate in 2009 and you will then know why their has been this great increase in these cards since 2007. It has nothing to do with the caliber of the card nor with the quality of the card, but with how well they paid Rupli Lobbyists to push these cards for them so that they could be marketed as they wished in more places. It was just a marketing strategy on Meta Bank and NBPCA which may be one in the same; marketing is basically Meta Bank’s major strength just behind collections.]
In an increasingly card-based economy, issuers of prepaid debit cards say they are offering an affordable alternative for the millions of unbanked and underbanked Americans. But consumer advocates warn that the industry needs more regulation, as some cardholders face hefty fee schedules to access prepaid debit. [Using a plastic card is not glamorous! Paying cash is! Having a savings account is even more glamorous. Join the cool people. Bank locally.]
The Convenience Of Prepaid
Consumers are drawn to the convenience of using prepaid debit cards, Terry Maher tells NPR’s Audie Cornish. Maher is general counsel of the Network Branded Prepaid Card Association (NBPCA), an industry group [ this NBPCA group signed up as a non-profit so they could make “donations” to our elected officials so that they could push through this prepaid bank card legislations and they paid Rupli and Associates, lobbyists in DC far more than any other lobbyist in 2009 to advocate for their prepaid bank card in both the US House of Representative and the US Senate], and has spent the past 25 years advising financial institutions on their prepaid card businesses.
Prepaid debit can be used anywhere the card’s brand, such as Visa or MasterCard, is accepted. [ This is actually an empty statement when the bank has decided to put a hold on your account so they can use your funds for their own purposes, that would be your own cash money. This is the biggest racket to hit the American people in years. Shame on our elected officials for falling for this major scam when we are in an economic downturn. These prepaid bank card have only caused great pain for the most economically vulnerable people in our society, but we are all vulnerable to these kinds of predatory practices and the minute anyone thinks they aren’t their guard will be down and they too will get hit.]
Top 10 Tips For Prepaid Debit Card Users
Choosing The Card
1. Make a list of how you will use a prepaid debit card.
2. Read the fee schedule before you buy the card.
3. Compare the fees of different card options.
4. Check if the card charges different fees for choosing signature instead of PIN when paying.
5. Check if the card charges fees for selecting the “credit” instead of “debit” option when paying.
6. Consider a regular bank account instead. (To avoid overdraft fees, ask to opt out of “overdraft protection.”)
Using The Card
7. Keep track of your balance to avoid facing fees for going over your card balance.
8. Sign up to receive written statements in the mail to keep track of your money.
9. Do not use prepaid cards to purchase gas at the pump, for hotels or rental cars. If you do, you may find you will not have access to more funds than the purchase and for a long period of time.
10. Do not rely on a prepaid card to build a credit record. Instead, consider getting a secured credit card with a credit line limited by a deposit, and limited fees.
Source: Consumers Union
*********Also be sure that the bank cannot change the terms of your agreement without notice and to your disadvantage. Meta Bank changed their rules mid sentence!!!!!!! Do you want to deal with banks like that???? Bank locally. Follow the guidelines listed above.
“It’s a lot safer than carrying cash[but it didn’t work out that way for me since Meta Bank held onto all of my money and would not let me access it. I would have been far better off hanging on to my own cash money. Meta Bank was the problem] … [and] the consumer can better budget and keep track of what they’re spending,” adds Maher. [Consumers can count dollars very easily!!!]
Prepaid debit cards can also ease the worries of gift givers, allowing recipients to purchase their own gifts with the cards. [Buy a smaller gift or give cash or a check.]
The Cost Of Prepaid
But the convenience of prepaid debit cards comes with a cost, says Adam Levitin, a law professor at Georgetown University who specializes in financial regulation. [ This is true!!! The bank has to make money and they will make your life hell!!!]
“You don’t have to worry about going over limit or overdraft fees, but there are plenty of other problems with prepaid debit cards,” Levitin says. [ There are and that is why this blog was created. We have been scammed and all that we can do is tell other people about it so it won’t happen to them as well. Please listen to what NPR is trying to tell you!!!]
Those problems come up because prepaid debit cards are largely unregulated, Levitin says, and as a result, some cards charge fees that can easily reduce the stored value even before the card is used.
Consumers often assume that the purchase price is the only cost of using a prepaid debit card, but some cards also charge activation fees, monthly maintenance fees, cash withdrawal fees, reloading fees and even inactivity fees.
Ripping Off Consumers? [YES!!! This is what we have been trying and trying to tell you: The Prepaid Bank Cards are more trouble than they are worth. Don’t buy them as gift cards this holiday season if you actually like the people you are giving them too.]
A prepaid debit card launched by the Kardashian sisters of the cable TV show Keeping Up with the Kardashians was recently pulled off the market after receiving criticism for its fee schedule and its appeal to financially unsophisticated teenagers.
Levitin says the RushCard offered by hip-hop mogul Russell Simmons is another example of a prepaid debit card that charges high fees. Consumers can choose from four different RushCard designs, with purchase prices ranging from $3.95 to $14.95, and monthly plan users pay $9.95 each month in maintenance fees. [ You hear that maintenance fees???]
“[Simmons has] lent his name to this prepaid product, which he likes to market … that he’s helping low- to moderate-income communities because it helps them avoid going to check-cashing outlets, which can be very expensive. But he’s just replacing one form of expensive financial services for the poor with another, and it’s hard to say which is really better,” Levitin says. [Levitin is telling the truth. Listen and follow Levitin advice!!!! Don’t use either one.]
A Solution For The Un- And Underbanked?
Maher says prepaid debit cards help meet the needs for the millions of unbanked and underbanked in the U.S. [Don’t believe this. We are telling you that we have been scammed by Meta Bank. NPR needs to be polite; they haven’t been scammed yet]
“We’re providing a solution to a community that otherwise would have a great difficulty in participating in everyday activities,” Maher says.[This isn’t a solution. People are complaining in great numbers about the prepaid bank cards. Don’t even buy the gift cards. Spend less. Only spend money you already have. Bank locally. Use a savings account and pay in cash. Do not use a prepaid bank card. This gives too much control of your life away. Do you really want to become a financial slave of banks like Meta Bank or place like Walmart?]
More From NPR’s Planet Money
The company is expanding the number of stores that offer check cashing, bill pay and the like.
At least 17 million unbanked adults do not have a checking or savings account, according to a 2009 survey by the Federal Deposit Insurance Corporation. The underbanked represent about 43 million adults who have a bank account but rely on alternative financial services such as check-cashing stores and payday loans. [ Go to the post office and buy a money order if you need to send money by mail, but don’t get this prepaid money card]
As the cost of keeping low-balance checking accounts rises, prepaid debit cards provide a more affordable option for increasingly more consumers, Maher says. [This is marketing and publicity talk by Maher.]
Regulation Prospects
Regulation of the growing prepaid debit card industry will most likely come from the newly established Consumer Financial Protection Bureau, but don’t expect it anytime soon, Levitin says.
In the meantime, Maher says competition between major card issuers will drive fee reduction for some prepaid debit cards. [Or they will continue to hold annual meetings to set their fees across the board so that they will form a sort of cartel.]
Still, Levitin warns that consumers on the market for prepaid debit cards will have to be careful. [Levitin is right. My advice is to stay away from these prepaid bank cards entirely if you want to live a happy life.]
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