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SmartCredit.com Consumer Education President John Ulzheimer on the flaws with prepaid credit cards.
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Banks nibbling and -- -- -- to death.
Many of us have turned to what they call prepaid cards.
This may not be the answer we've been looking for let's ask John Alzheimer president consumer education -- -- credit dot com John great see you again.
-- thanks for having -- Gerri appreciate it -- this is the fastest growing plastic.
And the country right now everybody's getting these prepaid cards.
The what's the big attraction really.
While there's a lot of -- honest on the prepaid card is becoming very very popular in the wake of the card act.
Because a lot of credit card issuers -- proactively discarding their customers.
Because they thought that they were too risky while these customers -- using plastic it's convenient to slight vs hearing around all the cash and needed to go somewhere.
And the market was still buyer variety of small number of companies have started to create -- a product called a prepaid debit -- -- the stored value card.
Which is on fire right now it is the most.
Popular yet -- -- making it all sounds so good way to -- I look at the fees on these things.
Not impressed -- take a look at the fees are eight issue of the car four bucks to fifteen.
An additional cargo wanna you wanna mom five bucks an ATM transaction two dollars and fifty cents maintenance John come on its ten bucks a month -- maintenance.
A replaced like after five -- This is ridiculous I can't even believe -- like these things.
Not out and I -- you did NASA it I liked it or not exactly about that part I hate you think how are you can't pay gets.
It's my money you're charging essentially an entry fee to get my own mind what I got here a lot of -- that the not a lot of cast aspersions on anyone person or company in particular.
But I think people these these cards are likely to be really really honest -- -- -- simply lightly.
There are far better options.
Alan van prepaid debit cards you know how -- raise your hand up here you have not be any sort of speeding charge on your credit union issued credit card.
Not a lot of people raised their hands right now.
They are infinitely better than cards issued by the big issuers and are infinitely better than these types of prepaid cards because bear -- So I think it if you do a little bit of shopping even just a cursory not a shopping around you can find a better option still maintain that unsecured line of credit which is infinitely more idol.
Bennett prepaid card which is locking up your money somewhere and still make out better on the back and -- repeat.
Perspective so let's talk about what's really going on here OK I think what's really going on here.
Is that people like the branding they like the idea pulling out plastic out of there while it doesn't matter to them.
Who issued -- where it comes from or what it is or what the terms and conditions are.
They get that they're happy and they're being robbed blind -- the same time.
I I think that is I think you hit the nail on head these are jilted lovers they're gonna -- the next person I start dating.
And a prepaid -- as the next person they've started to date locked in you don't often about this market is it's filled wet.
Arguably.
Deceptive companies and you have a company like -- -- The white Knight who -- into this -- just black market essentially it's gonna be so easy for a company like Amex.
To do very -- on this market because they have such a good reputation.
The other players that this industry Green dot -- and married -- you can't have you ever heard of these company is.
Now they are and there are not that many -- thankfully and you'll start seeing some bigger well known banks comment and actually cream off.
A lot of this business back into that and so that's a credit cards and their own prepaid -- watch it.
What are the terms on the Amex cards -- Amex prepaid cards are they -- then what you typically -- Base model that feeds from all those other insurers not just mentioned and all the ones and I didn't mention a -- honest there's a lot of other -- guys that are in the -- figure charts and even remember Amex has their own network processing payments.
So they can charge the issue or from the transaction -- bit more in the issuer can be charged by some of these other on the -- can be chart about some of these other.
It's her so there's money to be made simply through that -- network which is not being subsidized product cargo hold -- which is gonna make them much more competitive in some of these -- -- company's.
Well it's so is it worth it to get the Amex card bottom line here give us the advice tell us what we needed now.
Now it's not and it's -- because I don't like and that Amex card.
Very narrowly again and repay part it's a prepaid card it's your own -- if you it's your own freaking money why MIK anybody to have practiced my own money.
I would rather have a free access to somebody else's money manage it responsibly.
And I'd keep my young money a -- -- are earning interest or credit union weren't earning interest which is a balance.
That I need at the consumer.
Love it thank you you're always terrific appreciated.
I'm sure why there are those.
Those are issuers and the next day or -- why not you -- -- -- elevate them our thanks John.
