Raleigh, NC (PressExposure) December 30, 2008 -- As many Americans have less time to shop for holiday presents, gift cards are becoming an increasingly popular item to give. A new spin expected to be popular this year is pre-paid bank cards â or stored-value cards. These cards are similar to gift cards, but can be used anywhere credit cards are accepted, allowing the recipient more flexibility in where the money can be spent. Pre-paid bank cards arenât without their downside, however, and the Better Business Bureau (BBB) of Eastern North Carolina (www.bbb.org) is providing advice on purchasing and using these cards.
âPre-paid bank cards can be a great way to give money this year as many families are struggling to balance holiday spending with paying for essentials,â says Beverly Baskin, president and CEO of the Better Business Bureau of Eastern North Carolina. âGivers and receivers need to pay close attention to the terms and conditions, which can include substantial fees and limitations.â
Not only are pre-paid bank cards a popular holiday gift, they are also a way for people with limited access to credit cards to manage their moneyâincluding making it easier to purchase items online. The terms and conditions on these products do vary, so BBB recommends consumers pay special attention to the following details when giving, or receiving, a pre-paid bank card.
Fees, Fees and More Fees Recent BBB research shows one bank card offer with more than 27 different fees ranging from a little under a dollar to almost $20. Fees attached to the card include: contacting customer service, loading more money onto the card, and inactivity. The card even has weekly base fees of $1.95âwhich ads up to more than $100 a year to use the card. BBB encourages consumers to ensure they read the fine print and ask about and understand any âhiddenâ fees.
What if the Bank Goes Bankrupt? Despite some high-profile failures in recent months, generally bank failures are infrequent â only 15 banks have gone under so far in 2008. However, for those bank customers, their checking and savings accounts were insured by the FDIC and they didnât lose all of their deposited money. Unfortunately, the same insurance is not extended to pre-paid cards. The FDIC is currently looking into the prospect of including pre-paid bank cards under the umbrella of protection that covers other bank accounts, but as of now, any money stored on a card is in jeopardy if the bank managing the card goes under.
Protection Question if the Card is Lost or Stolen. Pre-paid bank cards are often branded by major credit card companies, such as MasterCard or Visa. While credit card companies promise zero or limited liability to card holders if their credit card is stolen or lost, the same protections do not necessarily apply to stored-value cards. Again, BBB recommends paying close attention to the terms and conditions of the card, which should outline the consumer protections allotted to the holder.
Just Like a Credit Card? In some cases, such as renting a car or reserving a hotel room, a pre-paid bank card might not be accepted. Consumers might also have a hard time using pre-paid cards when paying a deposit for larger purchases. Some card issuers, but not many, report to a credit bureau, which means that holding a card can potentially have a positive impact on a consumerâs credit score. Because a consumer cannot overdraw on the card or risk not paying a bill on time, thereâs no way for them to damage their credit by using a pre-paid bank card either.
For more information on giving and using gift cards, and on managing credit and debit cards this holiday season, go to http://www.bbb.org.
# # #