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Cash Back Rebates Now Take the Form of Prepaid Debit Cards

This article was written by in Credit. 32 comments.


My girlfriend is an elementary school teacher in the New York City public schools. One of the benefits of her employment is the reimbursement for the purchase of supplies and materials used in her class. Any teacher will tell you that they are required to pay for many of their own materials, and the amount of the reimbursement is subject to a maximum that never covers their full expenses.

The reimbursements until recently were distributed via check, an old-fashioned method of payment. More recently, the City of New York switched to prepaid Visa debit cards, offered by Chase Bank. This must be the result of some sort of a deal between the city and the bank because it does not make much sense for the employee.

Debit cards are meant to be used for spending, but these reimbursements take place after the spending is completed. If you want to use the reimbursements to pay yourself back for your spending on items for the classroom, you must visit a Chase branch to convert the card to cash. We tried taking the debit card to her personal bank of choice, TD Bank, but they claimed to be unable to do anything for us with the debit card.

These prepaid debit cards seem to be the latest trend for rebates. Verizon Wireless, the cellular carrier of choice for both me and my girlfriend, offers rebates on a number of its phones. The last time she needed to purchase a new phone, the rebate came not in the form of a check as it had on prior occasions, but in the form of a prepaid debit card. These cards are touted for their “convenience,” but absent direct deposit I would prefer a check.

Verizon Wireless offers a feature where you can replace your debit card by entering your information online, thus deactivating the card and issuing the old-fashioned paper check to the address on your account. This is a better option but introduces an extra step that many people will simply ignore.

Checks find their way directly into bank accounts while debit cards only make appearances in stores for purchases. If your spending is tight, this might not make a difference. If you use the debit card to purchase something you would have had to purchase anyway, without the debit card, the form of payment won’t affect the amount you spend. Most people’s spending is not tight and controlled. When you send debit cards out to 80,000 teachers, I would believe that many will be used for extra spending and some will not be cashed or used at all. The same is true for wireless phone customers who receive those rebates.

There are reports that the debit cards issued for consumer rebates are unreliable. Some have no problems while others find that cards are declined when they should not be. Even worse, some of these prepaid debit cards have monthly fees. The new rebate debit cards offered by Staples charge a $3 monthly “account maintenance fee” after six months. In states where they are allowed, which I believe is every state except California, fees can eat away at your rebate card balance until you are left with nothing. It is best to cash these rebates or convert them into a check and deposit the funds as soon as possible.

Have you seen more rebates offered in the form of prepaid debit cards? What are your experiences?

Updated September 17, 2011 and originally published August 24, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 32 comments… read them below or add one }

avatar DCH

Another frustration with these cards is knowing the exact balance on the card anytime you use it, because most of them won’t allow for a charge to be submitted for more than the remaining balance. So, many small balances go unused after an initial attempt gets rejected. If you know the exact balance remaining, many stores can do a split transaction and enter in a specific amount to the card, then pay the rest of what you owe with another form of payment. Definitely NOT convenient for the consumer!

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avatar KC

Recently the best deal I could work for my credit card rewards was in the form of a $50 VISA debit card. I thought “not too bad, I’ll use it to buy gas”. So I get the card and have to spend about 5 mins online activating it. Then when I try to use it it says to go inside. The line is too long for that. So I go home and look up the rules – you can’t use the card at the pump, you have to go inside to have it scanned first. 5 mins looking up the “Rules” another 5 mins standing in line. Well I only use $25 of the $50 on the card because my tank won’t hold $50 in gas. So I have to remember that $25 is still on the card. Next time I go buy gas I have to go inside – wait in line again – and then go pump.

This totally changes my opinion of my “rewards” card. I’m now just mostly paying with cash as the rewards are getting too few and too hard to use. I’ll just save myself the trouble.

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avatar MyJourney

Sprint did this to me, and I think it is a growing trend, although I don’t understand how it would be cost effective. That being said, I think I figured a way to combat this change!

http://www.myjourneytomillions.com/articles/what-to-do-with-a-semi-used-gift-card/

I take them and apply them right to online bills, and then when that bill goes to pull from your checking account (because we are all automated lol) it will pull less, and you end up a winner!

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avatar Steve

I recall getting a prepaid card when I signed up for phone service. What was silly was, it was only good with the phone company, but they still went through the rigmarole of mailing me a card and making me type in the info into their own website. Presumably some percentage of people never bother, enough to make printing and mailing the cards worthwhile.

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avatar Steve O.

I know this isn’t about rebates or rewards, but it is related. My employer recently took a company-wide survey asking everyone how they like getting paid. Things like dates, frequency, and method of delivery were all discussed. In the survey, for those without direct deposit, the company seemed determine to sell everyone on the potential benefits of getting the money into a prepaid debit card versus receiving a real check.

I just recently setup direct deposit to better manage my money, so I wouldn’t be affected anymore if a change were made, but I am strongly against issuing these debit cards.

It’s also interesting that you note that Chase probably cut some deal with the school district, since it really is of zero benefit to the employee.

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avatar Jason

“Checks find their way directly into bank accounts…”

IF you have a bank account. Many Americans don’t have or can’t get a bank account. If you don’t have a bank account, good luck getting your checks cashed at a bank. You’ll end up at a check casher who’s going to keep 1-3% of the check for his services.

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avatar MyJourney

“Many Americans don’t or can’t get a bank account”

What Americans can’t get a bank account? With today’s zero minimums, why can’t they get a bank account?

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avatar David @ DINKS Finance

This definitely needs some explaining. I have never heard someone claim that many americans don’t have a bank account, or that those who don’t can’t get one. If you have some statistics on this I’d be interested in seeing them.

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avatar David C

Some people might be on Chex Systems’ blacklist. Many lower-income Americans, though, don’t seem to want a bank account: recent immigrants, in particular, from countries with shady banking systems don’t trust banks.

Unfortunately, I’m not finding any links to the articles I wrote for now :-(.

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avatar Luke Landes ♦127,500 (Platinum)

According to The Economist in 2006, 12 million households in America operate outside the banking system.

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avatar My Journey

From that link:
” In America at least 12m households have no bank account—are “unbanked”, in the industry’s ugly jargon”

It seems to me that the author purposefully skips saying American(s) because that number likely includes those without SS #s.

avatar Luke Landes ♦127,500 (Platinum)

The unbanked is an overwhelming poor and minority demographic, so it is bound to include some without social security numbers including recent immigrants, but reading and listening to interviews with those who do not have bank accounts, it seems to be more a question of trust, or lack thereof, in the banking system as well as lack of access (poor/minority locations have few banks and more payday loan operations). “Don’t” is a question of trust, “Can’t” is a question of access.

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avatar M

I work in social services in NYC and I know a lot of people who don’t or CAN’T get a bank account. Most of my clients do NOT have bank accounts, even though they would like to have a bank account.

What do I mean by “can’t open a bank account”?

1) They were on welfare at some point, or they owe child support, or some other governmental debt.
—- if they open a bank account, the government will take their money away. And in many cases, it doesn’t go to the child or the child’s mama (where it might actually help), it just goes straight to the government if that baby mama ever was on welfare. So why would someone open a bank account to have their money taken away? Isn’t the idea of opening a bank account to help you SAVE money?
— This frustrates me greatly since I work with people to help them better their lives. A lot of that involves learning money management. If they can’t open a bank account, it makes it that much more difficult for me to help them learn how to budget. “Cash in the drawers” is not a great way to save. Argh.

2) They don’t have the proper documentation to open a bank account… and it’s a pain, sometimes impossible for some people, to get all this proper documentation.
— I actually fall in this boat in many ways – I don’t have an original birth certificate, nor an original social security card (both were lost by my parents when I was a child), luckily I have a passport and drivers license so I don’t need them, and I already have bank accounts, but I recently tried to get a birth certificate and I was REPEATEDLY DENIED… because somehow my mother’s name was misspelled on my original birth certificate, so I can’t get it by mail. If I REALLY want it, I need to drive 3 hours away on a work day… yeah, I’m not gonna do that. And I cannot get a social security card without the original birth certificate… see how complicated this can get? Many of my clients just don’t have enough documentation to get that bank account (or the money for the fees to get this documentation).

3) If you’re undocumented, it’s dang hard to open a bank account.
— We are (nearly) all descendants of immigrants… what do we have against immigrants? Does anyone here have an ancestor that was a stowaway 100 years ago (do you know if you do)? People believe in the American Dream, and risk life and limb to better their lives, despite hardships that abound.

Then think about the people who technically CAN open a bank account, but who don’t know how to, or end up going to a bank that has a lot of monthly fees and they get fed up… a lot of people without bank accounts also do not have regular access to the internet or are not computer literate, so they cannot learn about banking from online resources. They cannot compare different banks’ types of accounts.
If their friends and family don’t use banks, it’s not such an easy thing to learn how to do.

People who are reading this blog have way more financial saavy than my clients do.

Sigh… my clients often have to resort to check-cashing places that gouge their money, can’t save their money somewhere safe, and go to sharks for loans at way more than 25% interest. It’s not easy being poor.

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avatar megscole64

I have nothing against LEGAL immigrants. But if someone sneaks here illegally they are breaking the law and I have no sympathy for their inability to open a bank account.

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avatar CH

With all due respect, Walmart will cash a government or payroll check for only $3, only minimum ID required, nothing more than that which is required to receive welfare benefits in the first place or to become employed. Check cashing businesses are sharks but there are other ways. What you have to understand is that these banks issuing prepaid debit cards are preying on all of us with fees attached to everything you do with the card. The poor are the greatest at risk. They do everything they can with their fine print and misleading information and varying fees to get the consumer to rack up fees. For example, if I have $20 in my own bank account, I can use my own debit card attached to that account for free and make a purchase equivalent to $20. I have not overdrawn my account and have banked responsibly. Now, if I have a $20 prepaid card, I cannot make a $20 purchase. I can only make $19.75 or $19.50, depending upon the fee and if it is ran as a credit or debit transaction (the fees differ based upon the type of transaction.) If I mistakenly think the fee is only $ .25 when it is actually $ .50 and try to make a $19.75 purchase, or the cashier runs it as a debit instead of a credit, my payment is declined and another fee is attached. My $20 prepaid debit card is now only worth $19.50 and trying to make the purchase again will incur another fee. If I buy an item on the card and have to later return it for some reason, not only am I charged a fee when I make the purchase but also when the cost is refunded to the card. I cannot shop at garage sales and most thrift shops because they are not set up for debit cards nor can I make purchases where split transactions are not allowed if my money is on 2 different cards.I have had experience with these cards and believe me, without internet access or a cell phone on hand, these cards are impossible to manage. Getting an ID or banking account may be difficult or time consuming or a hassle at first, but after that initial hassle, having a central account you can manage is so much easier and less expensive than trying to manage your life with various prepaid cards that all differ on their fees. Don’t get me wrong, I know only too well how hard it is to be impoverished. I have been disabled for over a decade and have a son with autism who has been disabled as a child. I have lived these difficulties nearly everyday of my life. But for your benefit and your clients, you need to know that not all of what you reported is entirely correct. Government benefits cannot be seized by creditors nor can bank accounts that only receive deposits from governments issuing those benefits. So as long as disability, welfare, or unemployment benefits are made to a checking account that receives no other type of deposits, that account cannot be seized by law. Now, if a client owes a debt to the government, the government can often choose to collect that debt out of government payments before those payments are ever issued. Having a prepaid debit card can’t stop that. The only trouble is having an account seized by the government if you are making non-government deposits to it and the best advice I have for that is trying to make arrangements to settle that debt in an affordable manner so that that won’t happen. I will admit it is easier said than done but trying to make payment options like debit cards that assess outrageous fees the only choice is not the fiscally responsible choice for anyone including the minority of individuals who have a hard time banking. One of the greatest techniques used to keep poor people poor is to nickel and dime them. It is harder to see it happening that way and the banks have a greater chance at getting away with it. Poor does not equal unintelligent. Granted, if you are not very intelligent your chances at being poor are increased but many poor people are intelligent and can manage bank accounts. From what you reported, I can tell you care about and respect your clients, but they also need to be empowered. Empowering them is their best chance of escape from poverty. They need to know the fees attached to these cards and how to protect themselves from being nickeled and dimed to death. Remember, our own government not long ago used to charge us a fee (tax) to vote as a way to deter poor people from having a voice. Until we stop these unnecessary fees that only make the big banks richer and the rest of us poorer, it will continue.

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avatar SavingEverything

I find this fascinating: your girlfriend works for New York City public schools, and they are giving her reimbursements in the form of a Visa prepaid debit card, offered by JPM-Chase Bank. Guess what happens if you work in NY and are laid off? “Paper checks are no longer issued. The Department of Labor uses Direct Payment Cards to issue Unemployment Insurance benefits payments…” The issuer is JPM-Chase Bank. There must be something going on between the state of NY and JPM Chase. (You are allowed to withdraw cash with the card at Chase and Allpoint ATMs in the US. Chase allows you only 2 no-transaction-fee withdrawals per month at ATMs not part of Chase or Allpoint.)

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avatar My Journey

Not sure if this will show my colors or not, but maybe unemployment should only be on prepaid debit cards….since almost every legitmate business (I know not all don’t make the argument) accepts debit cards.

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avatar CH

Most businesses do but not all and if your only source of income is on a prepaid debit card you become limited. And unemployment does not pay all that well. If you are on a tight budget, sometimes you have to resort to garage sales or thrift shops where cash is generally the only accepted form of payment. In addition, when my children were in school, many things had to be paid for by check. My landlord only accepts a check or cash. A prepaid card that I am forced to use charges $1.50 (not including the fee assessed by the ATM) to get cash from the ATM and even that can only be done in certain increments. I am not sure if this is what you are implying or not, but unemployed individuals do not deserve to be punished with fees just because they are unemployed. With check or direct deposit, they can avoid those fees.

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avatar Frank

You can normally cash these gift cards out at your bank (or call around to see if other banks will do it). You can also buy a Walmart gift card with them, and then return that gift card for cash.

Frank

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avatar Kathy

I’ve received these twice for phone rebates and twice for insurance, and had no problems using them at Walmart, Walgreens, and Sams. When the balance was insufficient to cover my purchase, I paid the rest with my regular debit card with no problem. Most recently, I used one from Blue Cross (a “reward” card for filling out a survey) at Sams in March 2009 and, aside from any minor annoyance of the cashier, there was no inconvenience on my part.

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avatar megscole64

I don’t mind gift cards in general unless they have fees associated with them. I’m waiting on mine from Verizon and I knew ahead of time that it would be a gift card. Sure, I’d prefer a check but I’ll just use the card to buy groceries or something I’d already be buying. The cash can go into savings from my paycheck. It’s not that big a deal to me I guess. But then again I love gift cards and tend to always use them even if there’s only $0.01 left.

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avatar SteveDH

I received such a card from CITI after the purchase of Corsair memory modules. I didn’t have any problems using it but was put off by the “Agreement” that came with it. Written with a font size of 1 or 2 it can not be read without using a magnifying glass. It contained many fees that could be applied and CYA arbitration restrictions that always generate suspision in this household. I just spent it as quickly as I could and chopped it up. I don’t know if they are looking for people to starting funding and using these things or there’s some economic advantage for the issuer – either way, I for one, would prefer a check.

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avatar Funny about Money

In Arizona, too, unemployment checks are issued on Chase bankcards. It’s one heckuva scam.

Just TRY to get the money out in cash so you can deposit it in your own bank account! The Chase teller cannot see how much cash is on the card, and so you have no way of knowing for sure what’s there, since our Department of Economic Security is uneven in payouts of unemployment insurance. One week it’ll be one amount; next week it’s another. They issued me a card, said they’d put the first payment on it, but in reality never did disburse any money to the debit card.

You can opt out of the debit card, with some hassle, by asking for direct deposit. At the outset, you’re informed that your first payment will default to the debit card, and you have zero choice about that. As it develops, this isn’t true; my first payment was direct-deposited despite DES’s representative stating four times that DES would not disburse the first payment to the client’s bank, period.

Your only choices are a Chase debit card or direct deposit: DES will not issue checks for unemployment insurance. The DES rep warned us to watch out for Chase’s many charges and fees, which, like CITI’s, are manifold and come with an onerous arbitration clause.

Something is decidedly rotten in Denmark…

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avatar M

I have read most of these articles. And it looks to me that each person should have a choice to receive a check, Debit Card, or Direct Deposits. Especially on all those Rebate Debit Cards I have lost at least $100 now. Because they say they don’t expire until Dec. 2010. And instead of trying to get my $20 in Nov. All I am going to get is $5. Just because of their stupid Maintance Fees. Talk about getting screwed out of my money while someone else getting my money. Sometimes I use my credit card hopeing I will get a check so I can put that in the bank and use that to pay off my credit card now I can’t do that any more. And when you are on a very tight budget, what is one suppose to do?
Especially if your trying to upgrade your Antivirus Features and you are dependent on those rebates. Someone out there figured out how to screw the people over again.
Personally, I like others, think that these debit card with maitance fees should be outlawed and against the LAW.

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avatar Bonnie

I recieved a Citi debit card as a “rebate” after purchasing Olay products made by Proctor and Gamble.
I haven’t used it yet.
I don’t appreciate P&G giving my personal info to Citi who I consider one of the worst banks in the world ! I didn’t ask to be in their database and don’t want to be.
I am not happy about this and wrote P&G. No response yet!
I will not purchase P&G products again!
This is NOT right to offer a rebate and fail to send a check in that amount!

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avatar Judy

I am doing whatever I can to get Proctor and Gamble to send me a rebate check in place of the Citibank Mastercard Debit Card. I have contacted their Olay division directly, and so far, all I’ve gotten is a “sorry, but this is how we do rebates now,” response. I’m not giving up, and I intend to file a complaint with the Federal Trade Commission. I loathe Citibank base on past experiences with them and with their current policies, and would never voluntarily do business with them. Bring back rebate checks!

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avatar Bonnie

Judy,
At least P&G responded to you. I have not recieved a reply. I sent them emails and snail mail.
I also let them know I don’t like Citi and don’t appreciate them selling my personal info to them.
I also told them I will not purchase P&G products anymore.
I used the debit card they gave me and didnt have a problem.
I looked on the back of the card and in small print it said Non Reloadable.
When I first got it I was worried Citi had set me up with a debit card I would have to keep a balance on or incur fees.
I’m with you though. Bring back the checks, or at least when filling out a form give us a choice if we want a debit card or check. That seems fair.

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avatar Joe

It’s not illegal to provide your information to Citi to issue you your rebate in the form of the card. Complain all you like, the FTC will laugh at you.They weren’t obligated to give you a rebate in the first place. And if you had bothered to look at the rebate form, it says right on there how it is issued. Don’t do the rebate if you don’t want it.

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avatar Richard

I received a $15 rebate from Corsair for purchase of a memory stick via a Visa debit card issued by “MetaBank” — and it has been a horrendous, frustrating, and irritating experience. I first tried to use it to pay for take out sushi — but the merchant added some amount to the $15 I asked be applied to the card — SO THE TRANSACTION WAS DECLINED. I then waited a couple of weeks to assure that any hold had expired, and tried to add $15 to my Localphone.com account — but the bank tried adding a half-dollar or so as a fee for a foreign transaction, so the total exceeded the amount on the card — and thus THE TRANSACTION WAS DECLINED. (I live in the U.S. whereas Localphone operates out of the UK, but markets directly in the U.S. and bills in dollars over the internet). The card begins self-destructing in 6 months when a waiver of the $3/month “Maintenance Fee” expires.

Once the new hold expires, I plan to try to give the amount to a charity I contribute to each year anyway, so I can specify the amount of the contribution to the cent. Another possibility is to use it at a gas station — others in online forums report some success doing so.

The main problem is extracting the full amount from the card. Because restaurants add 20% when they seek authorization, the full amount on the card (initially, or remaining) could never be used at a restaurant, for instance.

IMHO, I cannot help but conclude, based on this experience, that this latest “innovation” in the rebate game adds another hurdle discouraging some rebate recipients from actually claiming the funds (or all of the funds) to which they are entitled. If a firm such as Corsair wanted to reduce a price, the simplest and cheapest means of doing so would be to simply post a lower price. Rebates add a proactive step that customers must follow — and we all know that some will fail to do so entirely while others try but fail to comply with all the instructions and deadlines (and I’m assuming that all valid submissions are handled correctly and in good faith by the firm — web forums are full of reports questioning this assumption). Rebate debit cards now add another opportunity for recipients to foul up or become too frustrated to bother claiming at least some of the funds to which they are entitled. I don’t find any other explanation for all of these hassle-inducing barriers to be remotely persuasive.

(Incidentally, I also received a rebate debit card from Verizon wireless a year or two ago — but found it much less problematic because, like the author of this article, I was able to go to the associated web site — in my case, I was able to request a direct deposit of the amount on the card, which worked fine. My experience with the Corsair card, which does not permit use at ATM machines or offer to cash out the balance on the card, has been much worse.)

I would urge customers to avoid purchasing products that promise rebates through debit cards. You might well find it not worth the effort you will end up expending figuring out how to fully use the darn thing — and as a social benefit, if your individual decision collectively amounted to a boycott, these manipulative firms might decide out of self-interest to implement price reductions in a more straightforward and less burdensome way. Please be sure, however, to let merchants know why you are not buying a particular product.

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avatar CH

A big problem is that this prepaid scam is now not only limited to rebates. Many employers and other entities are now making the switch to handling all their payouts through prepaid cards. One of my prepaid cards issued by Citibank charged a fee every time they declined payment and since names were not printed on the front of the card, they often declined transactions simply because the entity that had issued my card had misspelled it in their computer database and I had know way of knowing that. In addition, while they would decline a purchase if you did not have enough on the card for the transaction fee, on subsequent purchases you could be assessed $15 overages because they failed to reflect the prior transaction fees for up to a week on the available balance and would allow the purchases. The balance would go below $0 for a piddly $ .25 or $ .50 fee that they failed to make known on the available balance and then charge the $15 overage. At the time, I was forced to have reoccurring payments made to that prepaid card and their outrageous overages would reduce future payments. They said their website would list all transaction fees but they did not actually have the list posted. The phone numbers they posted for customer service were actually set up to deter callers from reaching live representatives–if you put in your card number as prompted you would be given an automated balance then disconnected. If you put in nothing, you were told they could not interpret your response and you were prompted over and over again. If you refrained from putting in your card number and waited on the phone until it when through this process for at least six times, 50% of the time you would be transferred to a live representative–the other half of the time you were disconnected. I actually had to get access to a number for their direct line which they fail to give out to customers. Of course, I only got it by spending over 45 minutes on the phone with them repeatedly mentioning the words CONSUMER FRAUD one of the few times I was transferred to a live representative.

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avatar Terry Kremin

Have a Norton Symantec reward card that I found in my wallet. I received it about 12 months ago through a rebate. It says it is good thru 1/12, and in small print on the back says it is subject to $3/MONTH service fees after 6 months. Even in California this card is not protected as it is a card that can be used at any store – so therefore doesn’t get California protection.

What a load of garbage. From now on, Always use or force them to send you a check!

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avatar CH

About the comments referring to people who cannot get bank accounts or banks charging large fees versus prepaid debit cards–many banks are now offering accounts with a small monthly fee for those individuals who are barred from regular accounts…these are often referred to as Rebound checking accounts. After a relatively short period of time of not having overdrafts, those individuals qualify for regular checking accounts with no fees. I pay nothing to my bank at all for my checking account or use of my debit card. Also, individuals who choose not to have a bank account and receive payment in the form of a check can go to the bank that issues the check and cash it for free. So, not having a bank account does not mean it is impossible or inconvenient or costly to cash a check. Prepaid debit cards are a hassle and don’t for one minute believe that businesses are not banking on the fact that many people do not use up their prepaid card balance. They set it up to make it nearly impossible to use their full value. It is another ploy they use to increase their profits. That said, being issued a prepaid debit card once and while might not be too bad, but now all types of businesses and entities are opting to make reoccurring payments via prepaid debit cards and not all of them are fee free. A plasma center in my town has just converted from paying cash to issuing payments via a Citibank prepaid debit card. These payments are rather small and done up to 8 times a month. One credit transaction per donation is free–after that, they nickel and dime you to death with fees that vary. If you don’t know the particular fee for your transaction and have the cashier swipe your card for just a penny more, you are declined and receive a decline fee which has the potential of snowballing into more fees. The automated number and website you are referred to for your available balance doesn’t reflect previous fees less than around 3 days old. So if you make a transaction that reflects your available balance, it will be allowed but then when those previous fees post 3 days later, you receive overage charges for $15 per fee. Also, many online businesses will debit $1 first to your card without telling you before they charge your actual amount due. The $1 is eventually refunded, but your order will be declined and you will be assessed a fee because the initial $1 charge lowers the available balance on the card. And most–if not all–online companies do not allow split transactions. To make matters worse, it does appear that the companies who have converted to issuing prepaid debit cards are getting some type of financial incentive to do so with no thought to us consumers. I have done some research on the Internet and the fees charged by these banks issuing prepaid debit cards vary depending upon what entity is issuing payment. For example, the transaction fees attached to Citibank prepaid debit cards issued to those receiving state unemployment benefits are approximately half the amount of those attached to Citibank prepaid debit cards issued to those receiving payment for plasma donations from The Interstate Companies. One can only assume that The Interstate Companies is getting a greater financial benefit for themselves somehow in choosing the Citibank prepaid card with the highest fees. If reimbursement by check for the population at large is not an option because of the impact on the environment, the election of direct deposit should be made able with exceptions for those without banking accounts to receive checks that they can take elsewhere to cash. Then tack on the option for prepaid debit cards for those who prefer that method of payment. But to only issue payments via prepaid debit cards that assess fees for 99% of your transactions is just another way for the big banks issuing these cards to get rich off the backs of the rest of us.

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