Pre-paid
bank and calling cards are on the rise and it is important to know exactly what
to watch out for before purchasing one. BBB recommends always doing your
research and making sure the company offering the prepaid card is reliable.
Pre-Paid Bank Cards:
In recent
years, there has been a rise in the number of pre-paid debit and credit cards. Several
large banks now offer these prepaid debit cards. Consumers can access the bank’s
branches and ATMs without signing up for a full-service bank account.
According
to the Consumer Financial Protection Bureau, more than 7 million consumers use
prepaid cards and the total dollar value of funds loaded to prepaid cards is
expected to grow at an average annual rate of 42% from 2010 to 2014.
Due to the
economic downturn, many people are turning to this new financial tool that may
give them some spending flexibility. As bank fees increase and checking
accounts become more expensive, consumers may be able to avoid certain fees
with pre-paid cards.
“Consumers need
to understand all of the terms and conditions and fine print associated with pre-paid
bank cards,” says Claire Rosenzweig, President and CEO of the Better Business
Bureau Serving Metropolitan New York. “These cards may come with various
benefits, features and fees.” These fees may include ATM access fees,
maintenance fees and cancellation fees. Some prepaid users are not charged any
extra fees for withdrawing money.
Consumers
should also consider getting a bank card that is backed by the FDIC, so that if
your card is stolen or lost, you may be able to limit your liability. Record
the card number and keep it in a safe place, in case a card is lost. Make sure
losses and unauthorized purchases are reported immediately.
Protections
vary from program to program, so it is important to understand that certain
federal consumer protections don’t apply to prepaid cards. On May 23, 2012, The
Consumer Financial Protection Bureau announced that it would be considering new
rules for prepaid cards. The
Advance Notice of Proposed Rulemaking on prepaid cards is available online at: http://files.consumerfinance.gov/f/201205_cfpb_GPRcards_ANPR.pdf
Pre-Paid Phone Cards:
Pre-paid
calling cards may be the right option for many consumers. When looking to
purchase a pre-paid phone or calling card, consumers should be aware of the
terms and conditions, including any fees. There may be some hidden fees and
service charges that may result in fewer minutes than advertised.
Some
prepaid cards are meant for a one-time use, whereas others can be reloadable.
Check whether the advertised minutes apply to one call or multiple calls and
remember to look for an expiration date (if any) on your card.
Make sure
the phone card company is trustworthy and has a good track record. Fake phone
cards have been known to rip-off consumers, so always ask friends and relatives
for references on cards they have used. Also, look for a toll-free customer
service number. Many consumers have complained to BBB of Metro NY about the
difficulty in contacting a company when a problem with the card arises. The customer
service number should be toll-free and displayed on the card.
For more tips you can
trust, visit www.newyork.bbb.org.
