Entries in Prepaid Debit Cards (3)


Advocates Question Justin Bieber's Prepaid Debit Card Endorsement

ABC/RANDY HOLMES(NEW YORK) -- Justin Bieber has been named a spokesman for a prepaid debit card company, raising eyebrows among some consumer advocates who caution against fees associated with the products.

SpendSmart Payments Co., based in San Diego, announced on Friday that the pop star will be a brand ambassador, headlining a series called “Real Talk.” The company says its SpendSmart prepaid card aims to educate families and teenagers about responsible spending habits. It also allows parents to monitor real-time spending online.

Bieber’s publicist did not respond to a request for comment.

“You know when I was a kid, we didn’t have a lot of money, so me and my family had to watch the money that we spent,” Bieber explains in a video. “I learned if you have $100 or $100 million, if you spend more than you have, you’re going to go broke.”

Bieber is far from broke now, however. He earned $55 million in the year ending May 2012, Forbes reported. And Bieber is earning $3.75 million for a 14-month contract, plus potential monthly royalties tied to the growth of active SpendSmart cards, according to SEC documents, the New York Times reported.

The deal includes stock options to buy 2 million shares of SpendSmart stock, which was trading around 40 cents a share Friday.

SpendSmart said it won’t comment on the specifics of the deal.

Consumer Reports urged caution related to prepaid cards for exorbitant fees in a report published last year. Among 15 prepaid cards analyzed by Consumer Reports, 14 charged for ATM withdrawals, 13 charged monthly fees from $2.95 to $9.95, while five charged for inactive periods.

Mike McCoy, CEO of the SpendSmart Payments Company defended the card, saying the SpendSmart Prepaid Card gives teens “freedom and independence while also teaching them the fundamentals of  financial responsibility.”

“More importantly, the SpendSmart Card gives parents control over their teens spending habits, supporting them in instilling valuable financial literacy fundamentals,” he said.

Other features include the ability to lock the card from your mobile device and block inappropriate spending as well as many other tools that families can feel safer with, he said.

SpendSmart fees include a monthly fee of $3.95, loading fees of $2.95 from a credit card or 75 cents from a checking account. A single scheduled monthly automatic payment from a checking account is free.

To withdraw from an ATM, there is a fee of $1.50 plus ATM surcharges. For an ATM balance inquiry, it costs 50 cents. SpendSmart charges $3 for 30 days of inactivity.

“Most fees are avoidable and no fees have been changed in light of our partnership with Justin Bieber,” McCoy said. “For the last three years this is and has been available as a prepaid card and not a celebrity card. We’re confident in Justin Bieber’s ability to be an ambassador for our brand, and in his ability to help his generation and their parents talk about responsible spending.”

Michelle Jun, a lawyer with Consumers Union, which publishes Consumer Reports, told the New York Times, “We would not recommend that parents use prepaid cards for their teens. It doesn’t help your teen establish a credit history or a relationship with a financial institution, so we recommend going the traditional route and opening up a checking account at your bank or credit union of choice.”

Copyright 2013 ABC News Radio


Wall St. Protesters React to Russell Simmons' RushCard

Chris Polk/FilmMagic(NEW YORK) -- Hip hop mogul Russell Simmons, a presence at the Occupy Wall Street movement, has made high-fee cards directed at the working class a part of his empire.  Simmons is the founder of UniRush, the financial services company that has put the RushCard into the hands of more than 1.5 million people.

Last week, Simmons’ prepaid card was a cause of contention among protesters. Occupy Wall Street protesters asked the mogul about his credit cards. Simmons replied, “I don’t run sh*t” and “I’m ready to pay more taxes.”

The RushCard is an item Simmons has pushed as a tool to rebuild credit history.

“It’s very inexpensive, it builds credit, you can transfer your money card-to-card, you don’t have to go to Western Union and spend a fortune. You don’t have to get on line at a check cashing place,” Simmons told Forbes magazine in March.

But using prepaid cards may not be the best way to improve credit. A report from Consumers Union states, “it is not clear whether these nontraditional reporting mechanisms actually help consumers establish good credit and credit scores.” One prepaid company discloses the reporting and scoring may be effective in obtaining a mortgage, but will not help with other “loans, credit cards or insurance policies.”

Russell Simmons did not return ABC News' request for comment.

The RushCard has two plans listed on its Website: Pay As You Go and a Monthly Plan. The cards are favored by people who have trouble getting a bank account. The more expensive monthly plan for the RushCard charges prepaid users $9.95 a month and tacks on a convenience charge of $1 for every purchase made using the card. Users can add funds to the card as needed.

In a match-up of prepaid credit cards by, monthly fees for such cards ranged from $0 to $14.95.

In his recent visit to Zuccotti Park, Simmons, a self-made millionaire and philanthropist, brought Kanye West, who wore a flannel shirt and several gold chains to the event.

Following his trip, Simmons tweeted about money and fame.

“There is nothing good about fame unless it inspires happiness in others. In fact w/out this recognition it causes sadness,” he continued.

“Don’t hate the players change the game," he wrote. "I want everyone to have greater opportunity then I was afforded #occupywallstreet.”

Copyright 2011 ABC News Radio


Report: Do Prepaid Debit Cards Cost More than Bank Checking Accounts?

Bananastock/Thinkstock(NEW YORK) -- A new study released Monday by Consumers Union, publisher of Consumer Reports, found that individuals using a prepaid debit card may be paying more in card fees than basic bank card users.

When Consumers Union compared 12 of the more popular prepaid cards to the basic no-interest checking accounts of Bank of America, Chase, Citibank, US Bank, Wells Fargo, Alliant Credit Union and Golden 1 Credit Union, the consumer advocacy group found that some prepaid card companies do not clearly disclose usage and monthly maintenance fees.  They also reported that monthly fees for four of the five bank accounts are less expensive than the costs linked with nine of the 12 prepaid cards.

Consumers Union also revealed tips on how consumers can minimize costs that occur with "free" bank checking accounts:

1.  Avoid ATM fees by using only the issuing bank's ATMs.

2.  By linking the checking account to a savings account, consumers may be able to get over-draft protection for free.

3.  Banks might waive monthly fees if account holders meet requirements such as having paychecks directly deposited into the account.

Copyright 2011 ABC News Radio

ABC News Radio