Tuesday, April 30, 2013

Another Prepaid Card Scam

Most people who use prepaid debit cards are: people who don’t want to use a bank, people with bad credit, people who want to learn how to control their spending, and people who desire to teach their children or grandchildren how to manage money.

Many celebrities have promoted prepaid debit or credit cards claiming that they will help consumers better manage their money.  Well, if all it took was for consumers to use a plastic card to better manage their money then none of us would have money problems or be in debt, therein lies the flaw in their marketing claims.

Justin Bieber is the latest celebrity who signed a deal with BillMyParents to endorse its SpendSmart prepaid card for an estimated $3.75 million plus monthly royalties and company stock.  According to BillMyParents Bieber will promote the new prepaid debit card to his over 30 million Twitter followers and 50 million Facebook fans.

Bieber produced videos about managing your money which air on the SpendSmart website. However, the card comes with lots of fees.  The monthly fee is $3.95 or $47.40 a year. There is a $1.50 charge to withdraw money from an ATM, and a $.50 charge for checking your balance at an ATM.  If your card is inactive for 90 days you are charged a $3 inactive fee.  If you lose your card you will be charged a $7.95 replacement fee. Using the card can cost you hundreds of dollars a year.

The card fees are high compared to other prepaid debit cards on the market such as the American Express Serve or American Express Prepaid Card which do not charge a monthly fee or activation fee, the Kaiku Visa Prepaid Card which charges a $1.95 monthly fee but does not charge an activation fee or the Account Now Prepaid MasterCard that charges a $4.95 activation fee but does not charge a monthly fee.

Funds loaded from a bank account are available in your SpendSmart account within 4-5 business days. The SpendSmart card allows you to add money once a month from a bank account for free but charges a fee for adding additional money from a bank account, debit or credit card.  You can load money 5 times during a 24 hour period for a fee and are charged a $.50 fee for insufficient funds. You can only spend $500 in a 24 hour period, get $200 at an ATM in a 24 hour period and add $500 in a 24 hour period. Exceeding the spending limits can cause a transaction to be declined.  

If your card or PIN has been lost or stolen you will lose no more than $50 if it is used without your permission within 2 business days after you learn of and report the loss or theft.

I am not sure how this card will appeal to parents or teenagers who spend money like there’s no tomorrow and may not be financially savvy enough to know about the fees or keep track of charges for using the card. Magic Johnson also has a prepaid card on the market. Unfortunately you never heard Bieber or Johnson mention that they used a prepaid debit card prior to becoming rich so why should young fans or parents get his?


Fariha Chowdhury said...

This is an informative post review. I am so pleased to get this post article. I was looking forward to get such a post which is very helpful to us. A big thank for posting this article in this website. Keep it up.
Get credit monitoring service and credit score monitoring winning best credit report monitoring service gives you unlimited access to all 3 reports and scores VISIT HERE http://www.bestcreditreports.com/

tutul hosen said...

I LOVE these so much and am inspired to make something similar myself (not to sell, just to enjoy)! Scouring thrift stores and junk heaps now! Tres cool site you have here, I'm so glad I found it! Blessings Get credit monitoring service CLICK HERE