Sunday, December 26, 2010

Don't Ever Buy Anyone a Prepaid Credit Card

You know those prepaid Visa's you can buy in stores? They look like great gift ideas. It's like giving cash but it shows you put in a little more effort then just going to the ATM and pulling out some cash. It also shows that you want the gift receiver to have the freedom to buy whatever they want. Unfortunately there are a number of things wrong with these gift cards even before they get to their intended user.

1.  You have to spend money to give someone money. That in itself is just a stupid principle. If I wanted to give you $50, I could just give you $50. These gift cards work on the premise of a business and no one is in the business of giving free things. So they account for this by charging you money to give someone money. That is like me going to give you a $5 bill and someone stepping in between us and asking for $1 for the transaction. (Now credit cards work on this same principle, but the payment recipient receives the charge and you sacrifice for convenience. In this case sending cash is actually more convenient.)

2.  You get charged to use these things. Now that I have my prepaid credit card gift I would like to go buy things. "Oh look, what a nice dog toy!" I use my card and then check my balance. Why is my balance less than it should be? Oh that's right, because I got charged a convenience fee to use my card. So not only did it cost someone money to buy the card but it costs me money to use the card. Sometimes you don't and sometimes it's not a lot, but the threat is always there.

3.  You can't use the entire card. I've had instances where I know the exact remainder on the card and try to use that exact amount and get declined. So not only do you get charged to buy one, can be charged just to use it, but they bank on the fact that you won't use the entire balance and add fees to deduct from the card if it doesn't get used after a certain time. Wow, these things are cash cows and I wish  started a prepaid credit card company, like the Kardashians

4.  No Customer Service. Goodness forbid if you have any problems with your card. Now this isn't always the case but I'm sure a lot of times it is and it definitely is if it came from WalMart (as Stef just learned). You can look up transactions, find out your balance, but what if you have to dispute a payment? Oh ok just write them a letter. What? That's how you solve a dispute, by writing a letter. By the time you get through with this process you probably have given up and lost a bunch of money.

While I am grateful for all the gifts I received (and the gift cards) it would just be better to get cash or a store gift card rather than a prepaid card. At least with the store card, you know it will work and have a place to turn if there is some problem. Plus they don't charge you to use the card and they don't charge you to buy it in the first place (because for them it is guaranteed business). And we all would like a hassle free holiday, right?

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