Good advice from Charlotte Stallings on My Fox Houston about reloadable prepaid cards:
Pretty Popular Prepaid Payment Cards: MyFoxHOUSTON.com
Many in the payment industry have complained that fees for payment cards or for checking accounts are difficult to figure out. So much so that respectable institutions like Bretton Woods and Consumers Union have published contradictory conclusions about which products are the least or the most expensive, while looking at pretty much the same set of products.
I have been arguing that fees are usually fairly explicit and can be found on websites or on paper agreements sent by mail to account holders. Evidently, the current action by the State of Florida against a number of prepaid card providers shows that there is still some improvement to be made in the quality of disclosures. Nevertheless, the most important factor in the impact of fees tends to be forgotten: how will people actually use the product?
That’s why we have introduced recently an interactive fee calculator on the iBankUP website. The calculator allows people to specify how they intend to use our payment service.
We ask 7 questions to our visitors:
Once a visitor to the site has answered the seven questions, a simple press on the “Calculate” button will produce the total sum of fees that the user would incur during an entire year. Of course, we also show how much fees some of our competitors would have charged based on the same behavior.
You can try the calculator by clicking here.
We also explain the math behind the calculator in an accompanying document.
We sure hope that others in the industry will do the same and publish their own calculators for all to see.
The day before the “Kardashian Kard” was introduced, I wrote a cautious note on the Huffington Post that said “read the fine print”. Little did I know that this prepaid card would beat 2 records:
While the shopaholic celebrity sisters did the most damage to themselves, the collateral impact to the prepaid card industry has been pretty widespread, in particular to products intended for teenagers. Since the demise of the “Kard”, many experts and journalists, have published articles extolling the virtues of checking accounts and bashing prepaid cards as generally inappropriate.
In fact, prepaid cards are a better choice than checking accounts for most parents to start transferring financial responsibility to their teens.
The overwhelming majority of checking accounts are intended for a single user. Only a handful of banks, like Wells Fargo, have created dedicated teen checking accounts where the parent and the teen each have their separate online access and privileges to manage the account. Without that kind of dual and hierarchical access, a parent has only two choices: either be the only one to manage the account, or give his or her teen a copy of the username and password needed to access the account. The latter option only works if the parent has no other account with the same bank; a very unlikely situation.
By contrast, prepaid cards built specifically for teens offer parents a supervisory access to load more money, monitor spending, or suspend card privileges when school grades are not good enough.
Also, unlike checking accounts, prepaid cards can’t overdraft.
Prepaid card fees are usually more transparent than checking accounts. Fee schedules are displayed on websites for everyone to see; not so with checking.
And we will likely see a massive increase in checking account fees in 2011, as banks start adjusting to the Frank-Dodd legislation limiting their abilities to charge overdraft protection fees.
Of course, I think that prepaid cards should not be marketed to teenagers by or with celebrities who are not qualified to be financial role models.
Parents can choose instead from a variety of teen-optimized products with low or very low fees like Discover Current, American Express Pass, MasterCard FaceCard, UPside Visa, Visa Buxx, or the PayPal student card.
And keep that username and password for their bank account to themselves.
A relatively new site called GetDebit provides information about “non-credit” card products.
In the US, debit cards that are linked to a bank account, and prepaid cards that are not, get both categorized as “debit” products and have that word printed on the front of the card. So, GetDebit actually deals with both debit cards and prepaid cards. (In Europe, prepaid cards do not have the word “debit” printed on them, and have other differences like not being necessarily embossed).
GetDebit stands out in its editorial approach: they do write articles about specific products and services without seeking advertising dollars from the companies behind them. This is worth noting in a world where infomercials are almost impossible to distinguish from genuine articles.
Granted, their business model is indeed to advertise products and place the highest bidders at the top of the pages, but they also mention products and do in-depth analysis without asking for ad dollars.
Evidently, we are praising them because they wrote a piece about the API that our company, Plastyc, released last week. And we have never paid them any advertising dollars.
NBA All Star and Phoenix Suns’ forward Amar’e Stoudemire is doing the hard work: visiting high schools in person to teach teens how best to handle their money.
Today, I am visiting Washington High School in Phoenix to present “The Fundamentals of Finance” seminar, in partnership with Plastyc, to encourage responsible money management skills.
Before you can spend money, you have to earn it (actually not all companies providing payment and money services to teens seem to agree with this evidence, see an earlier post on this).
So, here is Amar’e posting his “Earn Money” financial tips for teens on the Huffington Post.
