For those of you fortunate enough to actually get money BACK from the government this year, you’ve got some choices to make. Primarily, you’re going to have to decide how you want to receive your money. Before you go off making a horrible mistake because you’ve fallen for some advertisement on TV or the Internet telling you how you should accept your refund, here are some tips to help you make the decision… read more »

American Express and Walmart have teamed up to offer a debit card with low fees and advanced capabilities.  It is targeted to the consumer who wants advanced banking services without paying high fees.  According to American Express and Walmart, this account is to help consumers with everyday finances and avoid high checking fees that average $259 annually.

Based upon the price list released by the two companies, the only fees listed were $2 to add money from a debit card and $2 for ATM withdrawals.  ATM withdrawals at MoneyPass ATMs are free if you are enrolled in direct deposit, and you pay $2 for out-of-network ATMs. read more »

With the CFPB dominating the news latetly with their oversight of the credit bureaus and their action against Capital One for the deceptive marketing of payment protection plans we almost forgot to cover their interest in my least favorite of all payment methods…the prepaid debt card.

I have written many articles about the Consumer Financial Protection Bureau (CFPB), which was created to be the consumer watch dog.  They are the consumer protection agency with authority to take action against companies in the financial industry that engage in deceptive practices. One of the latest products they are targeting is prepaid cards.  I have not been shy about my opinion of these prepaid cards. read more »

If you live in South Carolina, you will receive your state tax refund this year on a Bank of America issued prepaid debit card, unless you opt out to receive it via a check or direct deposit.  According to this state, the reason was to save money, which could be as much as $1 million a year in printing costs.  Bank of America was selected, because they were the lowest bidder.  Don’t feel bad for Bank of America because they’ll make a great deal of money from this deal from the fees charged to the card users.

Fees charged

To avoid paying fees, you must take out the entire refund at the first visit to a bank or credit union that accepts Visa cards; otherwise, you are charged $10 each time you visit a teller. The ATM fee is $2.50 for machines outside of Bank of America network. The first replacement card is free and after that the cost is $5 each; express delivery is $15 per request. read more »

In January 2012, Suze Orman launched a prepaid card that she created and spent $1 million of her own money to develop.  She worked with TransUnion, one of the three national credit reporting agencies, to develop it and the card is issued by Bankcorp Bank. The card is called the Approved Prepaid MasterCard®.

Card Features

The features of the card are:

A monthly fee of $3 includes up to four cards and all benefits when you use the card exactly how Suze tells you. (this is code for “it’ll cost you more if you use it some other way.”)

No activation fee is charged. read more »

This almost turned out to be the shortest article ever, one word…”none.”  Prepaid cards are not reported to the three major credit reporting agencies (CRAs) – Equifax, Experian and TransUnion.   I found three prepaid loadable cards that state they report to credit reporting agencies.  The three cards are Prepaid Visa RushCard, READYdebit Visa and AccountNow. They don’t report to the three major companies, but to Payment Reporting Builds Credit (PRBC).  Ever heard of them?  I didn’t think so. read more »

In what might win the award for most boneheaded public relations move of 2012, on Monday January 9^th the world woke up to the announcement that Suze Orman, host of the popular Suze Orman Show on CNBC, had partnered with The Bancorp Bank to introduce and endorse The Approved Card, a pre-paid debit MasterCard.  Pre-paid debit cards have very poor reputations and are generally believed to be among the worst financial services products.  They’ve also attracted marketing partnerships with other notable finance experts such as Russell Simmons, Kimora Lee Simmons, the Kardashian sisters, Lil Wayne and Alex Rodriguez (sic).

The primary criticism of pre-paid debit cards is the fee structure, which is usually extensive and complicated, regardless of the particular pre-paid card.  The fees are normally spread out over a large number of consumer actions, such as asking about your balance or requesting a paper statement.  The Approved Card, for example, has a fee attached to 20 different consumer actions and they vary from as low as $1.00 (Bill Payment Fee using a paper check) to as high as $30.00 (Bill Payment Fee – payment inquiry.)  There’s a $3 fee just to get the card and a $3 monthly “account maintenance fee” as well.   This sets up a virtual minefield of fees that consumers may not be able to avoid.

The Approved Card’s 20 “billable” consumer actions is on the high end when compared to other pre-paid cards.  The RushCard, Russell Simmons’ product line, has 17 consumer actions that generate a fee and Lil Wayne’s prepaid Discover card has 7.  The GreenDot card, another common pre-paid product, has 9.  American Express only charges one fee for their pre-paid card, which is a $2.00 ATM fee (the 1^st ATM use each month is free, according to Amex).  This is why the Amex pre-paid card is widely regarded as the best of breed in the pre-paid environment.

After The Approved Card was announced a flurry of media activity took place covering the new product and its pros and cons.  And with most online media articles, consumer comments were allowed.  As you can imagine, the consumer feedback hasn’t been great.  I’ve reviewed the consumer comments from 5 different online articles* about the new card; The New York Times, The Huffington Post, Yahoo Finance, The Consumerist, and CNNMoney.  Here’s what I came up with…

* I didn’t consider off topic comments

Another troubling aspect of prepaid debit card marketing is the suggestion that using them is going to somehow improve your credit reports and credit scores.  This is absolutely incorrect.  Prepaid debit cards, debit cards and stored value cards of any type are not reported to the credit bureaus because they’re not credit products.  They will do nothing at all the help your credit, period.  The marketing of this card is, unfortunately, no different.  What would you think if you saw this:

If you’re like several media outlets that have covered this new card then you might think that this is a suggestion that the use of the card is going to be reported to TransUnion and end up on your TransUnion credit report.  That’s a reasonable, if not the desired assumption.  The problem is you’d be wrong.

If you search around on the card’s website you’ll find this language, “This data will not appear on your TransUnion credit report at this time.”  And from an article written by Jeanine Skowronski with MainStreet.com, “It is important to understand that this data will not appear on any TransUnion credit report at this time” says Colleen Tunney-Ryan, a spokeswoman for TransUnion.  Hmmm.

The bottom line is this…if you are desperate to have a slice a plastic in your wallet and you simply can’t get any bank to give you a credit card, debit card or secured card then go for it and get yourself a prepaid debit card.  But be prepared to pay terribly high fees on most of the products and, at the same time, do nothing to get your credit back in shape so that you don’t have to pay to have access to your own hard earned after tax money.

Credit Damage Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.