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Credit Card Applications » News » Products » Stars Come Out for Prepaid Cards – Are Customers Falling for Fame?

Stars Come Out for Prepaid Cards – Are Customers Falling for Fame?

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What do a sitcom star, a financial guru, a reality television diva, a baseball player, and a hip-hop mogul have in common? Believe it or not, they`ve all made the prepaid debit card market news in the past year or two. Each of them has either launched their own card, or lent their image to an ad campaign for a prepaid debit card. The Kardashian card is already kaput, having been yanked off the market back at the end of 2010, but the rest of them seem to be going strong.

How could George Lopez, Suze Orman, Kim Kardashian, Alex Rodriguez, or Russell Simmons convince someone to sign up for a prepaid card? Suze Orman is the only one of the bunch who is actually in the financial field, having risen to fame as Oprah Winfrey`s go-to financial advisor and authored many books and articles about personal finance. The rest of these folks are just rich – maybe people hope that if they have a card endorsed by one of them, some of their financial luck will rub off.

What exactly is a prepaid debit card? And if you`re in the market for one, are you better off getting one from a company like American Express or Western Union, who win awards for their cards and have solid financial reputations?

A prepaid debit card is not a credit card and should not be confused with one. Anyone can get a prepaid card, because you are simply paying money up front and having it loaded onto a card – you aren`t borrowing money, as you are with a credit card. When you`ve spent the money on the card, you can no longer use it, and there`s no bill to pay later, so you can`t accrue debt.

Who is the market for prepaid cards? Usually it`s people who can`t get approved for a regular credit card, or don`t have a bank account – the “unbanked” or “under banked” population. Since it`s vital to have a debit or credit card in today`s world, these people can load their cash onto cards that they can then use to buy things online, pay at parking machines, or make purchases at automated machines that only accept plastic.

Another group of people who can benefit from prepaid cards are students and their parents, who may want to give their kids a set amount of money on a card. This allows a parent give their child the convenience of a credit card without the chance to mess up and get into debt. Prepaid cards can be a great tool to help kids learn about financial responsibility.

There are two major drawbacks to prepaid cards, however. The first one is that they can`t help anyone build credit. Since they aren`t actually credit cards, they don`t report to credit bureaus. The drawback of a prepaid card, though, is that it`s often loaded with fees. What sort of fees do they carry? Check out Russell Simmons` RUSH card – a prepaid card that`s been around since 2003.

RUSH UNLIMITED PLAN PAY AS YOU GO PLAN MONTHLY PLAN

Card Fee

$3.95 – $14.95

$3.95 – $14.95

$3.95 – $14.95

MONTHLY FEES

Monthly Fee

$5.95 with Direct Deposit

$7.95 without Direct Deposit

$0.00

$9.95

DOMESTIC TRANSACTIONS FEES

Convenience Fee

No Charge

$1.00, capped at ten dollars ($10.00) per calendar month

Use your PIN: $1.00

Without PIN: No Charge

ATM Balance Inquiry Fee

$0.50

$0.50

$0.50

ATM Withdrawal Fee

$2.50

$1.95

Two (2) at No Charge each month

$2.50 for each ATM withdrawal after first two (2)

INTERNATIONAL TRANSACTIONS FEES

International Convenience Fee

No Charge

$2.00

Use your PIN: $1.00

Without PIN: No Charge

International ATM Balance Inquiry Fee

$1.00

$1.00

$1.00

International ATM Withdrawal Fee

$2.50

$1.95

$2.50

Currency Conversion Fee

Up to 2% of transaction amount

Up to 2% of transaction amount

Up to 2% of transaction amount

OTHER FEES

Add Money

No Charge

No Charge

No Charge

Online Statement

No Charge

No Charge

No Charge

Paper Statement

$1.00

$1.00

$1.00

Maintenance Fee

$0.00

$1.95 if no loads or transactions for 90 days

$0.00

OPTIONAL SERVICES

Express Cash Fee

$30.00

$30.00

$30.00

Bill Pay Enrollment Fee

No Charge

No Charge

No Charge

Bill Payment Fee

No Charge

No Charge

No Charge

Plan Change Fee

No Charge

No Charge

No Charge

Replacement Card1

No Charge

No Charge

No Charge

Card-To-Card Transfer Fee

Between your cards: No Charge

To another RushCard: $0.99

Between your cards: No Charge

To another RushCard: $0.99

Between your cards: No Charge

To another RushCard: $0.99

1 If you wish to change your card design, this fee will vary depending on the new card design as described in “Card Fee” above.

Now let`s look at the American Express Prepaid Card, which carries the following fees:

THE AMERICAN EXPRESS® PREPAID CARD.

Spends Like Cash.

  • NO MONTHLY OR ANNUAL FEES
  • NO PURCHASE FEES
  • NO OVERDRAFT FEES
  • NO CREDIT CHECK
  • NO DEBT

Feels Like Membership.

  • PURCHASE PROTECTION1
  • FRAUD PROTECTION
  • ROADSIDE ASSISTANCE2
  • AWARD-WINNING CUSTOMER SERVICE

With no annual fee, no monthly fee, no purchase or overdraft fees, and only a $2 fee for ATM withdrawal, the American Express Bluebird prepaid card looks like the best deal. American Express credit cards are among the harder ones to qualify for – consumers have to have good to excellent credit to get them – but this is not so with the prepaid cards. Anyone can carry an Amex prepaid card in their wallet.

Credit-Land.com also recently looked at prepaid cards from Western Union, which won awards for offering thebest consumer value and having the best general-purpose reloadable cards. They have the advantage over American Express when it comes to fees, offering some of the lowest fees in the prepaid card field.

When it comes to prepaid cards, don`t fall for a familiar face. Stick with the tried-and-true to get the most from your money.

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