Debit Cards
Prepaid Debit Cards: Not So Prepaid, After All
What: So, you’re about to check out at the grocery store, and a $50 prepaid visa card catches your eye. That would make a great Christmas gift for someone! Or perhaps you’re into DIY banking, or have horrible credit, and need some kind of plastic to get by. If you end up buying that prepaid debit card, you’re like millions of other Americans. And if you’re not careful, you could get screwed over with hidden fees like millions of other Americans. You name it, they’ll charge you for it. Monthly maintenance fee. Ouch. ATM balance inquiry fee. Ouch again. Inactivity fee. Are you kidding?
What They Say: From the New York Times:
Like many workers, Tyrell Blocker, 20, of Brooklyn, could ill afford the surprise when he took such a card last week to a Pay-O-Matic Financial Services store in Manhattan after a bank turned him down for an account because he lacked one of two required pieces of identification. As soon as the cash from his paycheck landed on his card, he noticed fees accumulating. Mr. Blocker returned to Pay-O-Matic to complain and only then was provided a detailed list of more than two dozen fees, he said.
What We Say: This is just sooooo disappointing. We’ve been big fans of pre-paid debit cards as a way to manage your expenditures and to teach kids how to use credit responsibly and now this. While banks and credit card companies are notorious for nickeling-and-diming customers, it’s much easier to hide fees from shoppers via preloaded debit cards. If, however, you play your prepaid card right, you can save a little money over traditional banking. But only if you’re really on top of it. When in doubt, pay with cash or check. Stores still accept paper, we promise!
Wal-Mart Lowers Price on Debit Cards
What: Wal-Mart’s prepaid debit card just got cheaper—once $9, it’s now just $3 (other fees associated with the card have also been lowered). The typical price of a money card like this is anywhere from 10 to 15 bucks.
What They Say:
“While we’ll make a little less money than we would with that other pricing, we feel like this is one of those game-changer type moves,” said Jane Thompson, president of Wal-Mart’s financial services division, in an interview.
What We Say: The debit card is just one of the many moves the retailer we love to hate has made to keep customers coming back day after day; it’s also opening 1,000 financial services centers (instead of its own bank, a recently abandoned idea) in 2009. By doing this, Wal-Mart can target shoppers who don’t have bank accounts but still need to pay bills, transfer money, and do other basic tasks. And for those who do have bank accounts/credit cards, etc, there will be just one more reason to one stop shop at Wal-Mart.
Should we applaud Wal-Mart for making it easier for folks on a budget to buy what they want and need, or feel a little nervous about this expansion? Let us know if you’ve used Wal-Mart financial services or its debit card - what has your experience been like?
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