Pre-paid debit cards are fast becoming the way to conduct business for many people and businesses in the country. The commercials on TV make it seem like it is the easiest and best thing in the world to sign up for one—to be able have access to the money that you have worked hard for all week long. Only you find out that when you opted to have your paycheck automatically deposited on to your debit card account, you now have to pay a fee to take it out of the teller machine. Will someone please explain to me how this is supposed to make you financially independent (as one of the debit card commercials states)? Stating that it is giving you access to the American Dream … what? By giving you a card that makes you pay a fee to have access to your own money. How is that going to make you financially responsible, when all it really does is have you pay fees for things that you can do just as easily with no fees in person with cash or by mail with money orders?
I will break it down for you step-by-step, for I have had experience using a debit card and the ways it will have you pay more money out than you have coming in. I lost my home and my credit was destroyed with a dismissed bankruptcy and home foreclosure on my credit file. No one was going to give me any type of credit and I was in the process of destroying my checking account (which I had a check/debit card to use to access my money). I applied for a RushCard and I got it. I never used it for a long time but I liked just having it. When I finally destroyed my checking account, I began using my debit card every now and then. I only used it when I really needed to buy something on the Internet—other than that, it sat in my wallet. What I did not do was have my money automatically deposited on to the card. Why not, you ask? They make the process seem so easy to do—just send them the information from your employer and voila! It is done. You no longer have to wait for a paper check each Friday and for those who do not a bank account you no longer have to wait in line at the check-cashing place either, I did until I got a savings account for myself and my son. And the big one is that you can feel safe because you do not have any cash on you to lose or have stolen from you.
The main reason why they want you to have your pay automatically deposited is because you now have to pay a fee to access your money from the debit card. Yes, you now have to pay a fee to have access to your own money—money you need to pay your bills with. The companies that have these cards have it all set up to have you believe that all you have to do is sign up and have your bills paid by their system and make purchases and do every thing you have always dreamed of doing but couldn’t because you did not have access to “credit,” access to the American dream.
The thing is, this is not credit—this is your money. If you did not know how to budget before you signed up, you are in for a hurtin’ when you sign up for a debit card and start to pay your bills. The fees start when you just want to your get money on payday; you have to use an ATM machine. And when you use the ATM machine, you have to pay a fee—a fee from the ATM machine owner, the bank that runs the ATM machine and the company that owns the card that you now have and it is the only way for you to have access to your entire paycheck. The money that you have worked long and hard for all week and all you want to do is to be able to spend your money how you please and pay some bills. Every single time you use the card, you have to pay fees ranging from $1-$5 per transaction. I know—it boggles the mind, right? You pay your electric bill and you pay a fee, you pay your car payment and a fee. Fees, fees, fees and more fees—something that was supposed to make you financially responsible is taking your money, money you need to use to do the things they make you pay a fee for doing. Each debit card company has its own set of fees; I did research on them and they run the gamut.
What I do know is this—most of the companies will not send you a card unless you enroll into their automatic deposit program. One company that I looked up on the web would not let me pass the first page to see what fees they have unless I gave them my information and when that happens, you should say no. So now that you have your card you want to do the things you see everyone else with credit cards do, rent cars and make hotel reservations. You’re all happy and you planned a weekend away and you call the car rental company and you get your car, you gave them your debit card and you knew the money was there because it was payday. Now when you signed up for the debit card you went ahead and signed up to have your bills paid by the debit card. The debit card company tells you how convenient it is and how it will help you financially in the long run, making sure your bills are being paid on time because now they can take it right out of the account. You told the companies when to make the deductions and you had it all planned out; you go away for the weekend, had fun, with not a care in the world. You come back, take the car back, and of course, we know that you pay cash once you turned in the car. A couple of days go by and you start to get calls from the companies you told to make the deductions for payment—there is no money in your account. You’re like, “Okay, wait a minute, someone has my card number and they have stolen my money.”
Actually, car rental companies (if they do take a debit card) will put twice the amount of the hold on your card than if you had used a regular credit card. The reason being is that you can use up the money on a debit card long before you turn the car in, and if there is damage they will want their money. They will put almost a $1000 hold on your money and they will and can hold your money for almost thirty days. The rental car company will tell you to have the debit-card company call them and they will release the hold—this will work with a real credit card company. I should know—when I worked for the authorization division at a credit card company, this was a routine call and as long as we could verify the information from the rental company, we could release the hold. I cannot tell you the information we needed to verify to release the hold; that would be breaking banking laws and though I do not work for them anymore, I am still loyal to the industry itself and do not believe in cheating anyone or any company.
But a debit card company will not do this. Actually, they do not perform any real customer service; they will not fight for your rights when it comes to defective products nor will they call the company on your behalf. When you call and ask them for a statement because you have not been sent one, you will have to pay a fee as high as $25 for each copy. They will tell you that you have to come to some resolution with the company on your own—they will not help you. Now all the while your bills are piling up and so are your fees from the companies that were not paid, so you are out of even more money … what to do?