The downside of prepaid debit cards goes far beyond the scam tactics that META BANK practices routinely

CREDIT CARDS

5 downsides to prepaid debit cards

By Constance Gustke • Bankrate.com

The downside of prepaid debit cards

With celebrities hawking prepaid debit cardsthese days, it’s easy to be swayed by hype.

Witness the cards’ ballooning growth.[META BANK and the non-profit Network Branded Prepaid Card Association hired RUPLI and Associates in Washington, DC to lobby our elected officials so that these prepaid cards have made a huge inroads into the public domain. They are on sale everywhere. They are marketed by places we may already shop, but it is the banks who regulate these cards. METABANK blatantly scammed me and then lied to me…. It was such an awful experience that I would like to prevent this from happening to another person ever again.]

By 2013, the prepaid card market is set to more than double from $330 billion in 2009, according to Mercator Advisory Group near Boston.

But these cards have weak consumer protections, according to a Consumers Union report on prepaid cards.

Some have extra fees.

Others have come and gone (witness the Kardashian Kard). And users can have difficulty building a credit history.

“It’s hard finding all the fee information,” says Jean Ann Fox, director of financial services at the Consumer Federation of America.

Prepaid debit cards are reloadable and work much like regular debit cards.

According to Consumers Union, their target is the unbanked, or the growing number of low-income consumers who don’t have a bank account.

Even so, there are benefits. Some people use prepaid debit cards to stick to a budget or dish out money to kids at college. They also make sense for people who are concerned about identity theft. “They limit your exposure,” says Ben Jackson, a senior analyst at Mercator Advisory Group.[Having used these prepaid cards, issued through METABANK, I was really taken advantage of unlike ever before so I must warn others about the problems that I encountered personally by using a Prepaid Card issued and regulated by META BANK. I believe that these PREPAID CARDS are the biggest scam of the consumer/public at this time. I can’t find any redeeming qualities in PREPAID BANK CARDS.]

[However, it was the bank itself who scammed me. METABANK took my cash money and held it from me. They lied to me for how this had happened, but since they create and retain the right to change the rules governing the PREPAID CARDS, the design of these cards favors the bank to the great detriment of the customer.    College students have complained that they weren’t able to access their own money so that they could pay their bills on time. META BANK gave them a very lame excuse for locking them out of having access to their own money. Banks would better serve the American underbanked by genuinely teaching them how to save money, but now banks want consumers to keep at least $1,000 in the savings account just to avoid being hit with daily fees….. The whole design of our current banking system is to milk dry the consumer. Consumers must speak up and complain about how they have been mistreated]

But before buying, follow these pointers on what to consider.

Users face lots of fees

A slew of fees can quickly ding your prepaid debit card.

Fees may be charged for

activation,

withdrawals,

overdrafts,

paper statements,

balance inquiries

and even dormancy. [Dormancy which is giving the issuing bank an even longer interest free loan by you as their customer and then they have the audacity to charge you fees….OUTRAGEOUS!!!]

For example, all 19 prepaid cards studied by Consumers Union charge fees for withdrawing cash from ATMs, ranging from 99 cents per withdrawal to $2.50.

But dormancy fees, or fees charged for nonuse of a card, are the most problematic, says Suzanne Martindale, an associate policy analyst at Consumers Union. “They would never happen with checking accounts,” she says, adding that customer service fees can also add up.

The difficulty in computing card costs is in finding a fee schedule for prepaid debit cards, she says. “The packaging doesn’t list them,” Martindale says. “So you may find fees after the fact, unlike checking accounts.”

[Prepaid Bank Cards are designed to make money for the bank that issues them. Promoted as being better than cash, the cards fail consumers over and over again in numerous ways…. This blog was established to help to protect consumers by providing them with clear information about other consumers’ experiences using the PREPAID BANK CARDS…. we cannot endorse the PREPAID BANK CARD for anyone, especially those issued by META BANK or a bank that operates like METABANK. By using a prepaid bank card, you as the customer become a pawn for the bank; the bank makes lots of money with the interest free loan that you are giving them… then they charge fees on top of that!!!! Something is very skewed and very wrong  with the concept that allowed these prepaid bank cards to be issued. Some of  it has to do with how the cards are marketed. The other part is that METABANK is really a collections agency and not a bank in the sense that most of us think of a bank…. METABANK isn’t serving their client base. METABANK is using their client base for their own personal gain.]

Also, fees vary widely. So make a list of the ways you’ll use the card — such as online — and compare fees for those transactions.

Still, some cards do carry low fees. The Mango Prepaid Card offered by Mango Financial Inc. has no hidden fees. Walmart’s Moneycard also has simple fee schedules that are easy to understand.   [None of these cards are worthy…. stay far away from them!!!]

 

Fewer consumer protections

 [I couldn’t find anything that protects consumers, not even clear information. METABANK retained the right to change the terms of the account without warning. They also lied to me. Please stay away from these cards because so many consumers have found them to be highly problematic for the consumer.]

Unlike traditional debit cards, prepaid debit cards have less government oversight. [ Herein lies part of the problem.]

For example, if prepaid cards are lost or stolen, they’re not protected by the same regulations and safeguards that traditional debit cards are, according to a Consumers Union report.

“There are only voluntary contracts, subject to change at any time,” Martindale says. “If your card is stolen, you may lose your money.”

Prepaid cards are usually cobranded with Visa or MasterCard insignias. But their zero-liability protection on traditional cards, in which the holder isn’t liable for fraudulent charges, is more limited with prepaid debit cards. “There are loopholes,” Martindale says. “You can only challenge two a year.”

Traditional debit card owners fare better. If a traditional card is stolen or lost and you report it within two days, your liability is limited to $50.

Difficulty building credit history

Prepaid debit cards look like credit cards, but there’s one key difference. They usually don’t log your credit histories.

“Very few cards offer this service,” Martindale says. “If they do, they charge unbelievable amounts.”

Many card companies claim they will report your history to the credit bureaus, but don’t.

Others actually report to an alternative credit reporting service, such as PRBC, or Payment Reporting Builds Credit, but not to the major bureaus. “So there’s little or no benefit,” she says.

What’s more, you’re not building a relationship with a bank. “Think about the short term and the long term,” Jackson says. For example, prepaid debit card companies usually don’t offer additional accounts, such as savings accounts, that can help you to grow assets.

“The cards are mainly transactional tools,” Jackson says. [ So you would be far better off paying in cash which allows you to have full control of your own money!!!]

Instead, think about getting a secured debit card. It’s backed by deposits you make to a bank, and it can help you build a credit history. [However, given the fact that METABANK lied to me and kept my own cash money from me when I needed it the most, I would never consider attaching a checking account to a prepaid debit card. This would give far too much control over your income because they want your salary or government check directly deposited into the associated checking account with their prepaid card. Since METABANK lied to me and kept me from having access to my own money, why would I give METABANK or any bank like it that much control over my entire income and financial assets. Please be warned by someone who was already scammed by METABANK so that you can be spared.]

Note term and card changes

Prepaid debit card terms — and even the cards themselves — can come and go.[This is really because they are self-regulated and out to make a fast buck for themselves.]

Take the Kardashian Prepaid MasterCard, which was pulled from the market in November. The card carried a picture of the glam trio of sisters. But this celebrity plastic was packed with hidden fees and weak consumer protections, says Consumers Union. Fees included $1.50 for ATM withdrawals, $1 to check balances and even $6 to cancel an account. But that’s not all. A six-month plan cost $59.95; for 12 months, $99.95.

“This is a shape-shifting market,” Martindale says. “Fees keep changing. And the Kardashian card was off the market after bad press.” [Fees keep changing and METABANK even indicates that they retain the right to change the rules governing the card you bought at any time and without notice….. This is where their scam begins…. Don’t you wonder if METABANK has ever considered the fact that they are abusing hard working, decent people!!! METABANK studies the law to keep a few steps ahead of it; METABANK pushes the limits and the parameters to see what they can get away with. When METABANK advertises for jobs, they don’t look for honest people who have personal integrity which would be something as consumers that we would want. METABANK wants people who can work in a fast paced and ever changing workplace….. why, yes, this is coded language for how META BANK will be constantly on the look out for new ways to scam the general public, their customer base. Riding close to the line of existing laws, META BANK studies the laws to see how they can push them for their own financial advantage.]

Consumers must stay on top of prepaid debit card term changes, too, she says.[ Life is complicated enough, but by putting cash money on a prepaid bank card, you are giving over all control of those assets to an unknown and rather anonymous bank. I can’t advise anyone to even get a debit prepaid bank card. I am now seeing in gas stations signs warning consumers about these cards; the prepaid cards just don’t work well enough, they are filled with constant changes in how they work and many places also are beginning to refuse to accept them. Because METABANK designed the rules for these cards and then regulates the rules as they find advantageous, I can only advise consumers to stay far away from any and all PREPAID BANK CARDS …. even those PREPAID GIFT CARDS because it is METABANK using various names who manages and oversees the majority of all of the PREPAID CARDS on the market per their own publicity.]

Tough to follow transactions

Tracking prepaid debit card transactions can be hard. [ I was unable to even access my account online. Phone calls were nothing but a run around for me as their customer. Basically, I had no concrete information about my account when I know that the METABANK Representatives could pull up my account on their computer screens easily….. This is what makes it a con, a major con, of the consumer.]

“You could get double-swiped,” says Fox. “And you don’t usually get paper statements.” [META BANK doesn’t send out paper statements to save money, and to make more money for themselves…. This has absolutely nothing to do with customer service. Customer Service doesn’t factor in to how customers will be treated by META BANK…. The term “Customer Loyalty” has to do with a gimmick to get customers to win something by either using the METABANK CARD more or at the same locations which have partnered with META BANK…. The term “Customer Loyalty” has nothing to do with getting repeat business based on quality service nor on valuing their customer base; it is just a way to make more money for the PREPAID CARD bank that processes the card which most likely is METABANK which boasts as being the largest in the USA.]

Since 18 out of the 19 prepaid debit cards studied by Consumers Union charge fees for balance inquiries, it can set you back. The fees range from 45 cents to $1 per inquiry. Also, 15 of the 19 prepaid cards charge fees for paper statements ranging from $1 to $5.95 per statement.

However, all 19 issuers provided free access to account statements online, says the Consumers Union report. [METABANK’s online account was impossible to open up. This is what made it possible for them to perpetrate their scam. METABANK also lied to me; this sent up red flags for me. Why would they feel the need to lie to me in such open and bold ways?  Ah, yes, once METABANK has control of your money, you don’t and they can say and do as they please. This aspect may be the most problematic for consumers; METABANK is an unseen entity. They don’t see the consumer so they find it far easier to scam us. We don’t see them so we cannot remind them in anyway about how they have treated us so poorly… Anonymity serves METABANK and any other operation that works using their format quite well for being able to scam hard working citizens….. All that I can do is to tell you what happened to me and try to warn you so that you will be spared.]

Additional resources

For more information on debit cards, check out these stories at Bankrate.com.

Read more: http://www.bankrate.com/finance/credit-cards/5-downsides-to-prepaid-debit-cards-1.aspx#ixzz2Elc5A97h
Follow us: @Bankrate on Twitter | Bankrate on Facebook

 

 

Advertisements
Leave a comment

2 Comments

  1. hufh49hferf

     /  July 30, 2013

    Prepaid credit/debit cards are NOT what they claim to be. If you buy things online using them as a credit card, then you may or may not have any problems. But BEWARE if you use them as a debit. That is when their true nature reveals itself. They rarely ever work as a debit card. And people quickly find out they are lost in a nightmare.

    The biggest reason to stay far away from prepaid cards is this. If you return an item to a store, it might take weeks to get your money back. The companies that host these cards are CROOKS. They do not operate like real banks.

    STAY FAR AWAY FROM PREPAID!!

    Reply
    • Prepaid debit cards are not as useful to consumers as banks like META BANK would like consumers to believe. Yes, the companies that provide these bank cards that require you to hand over your cash money to them first. Then once they have your money, the bank will have full control of all of your assets.

      Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: