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  1. Bagels says:

    That’s some popped collar

  2. LiveToEat says:

    What about a secure credit card? After bankruptcy we got one through our credit union to start the process of rebuilding our credit. I don’t remember any ridiculous fees and what not. We put $200 in a savings (similar to putting money in a prepaid) then we used it like a regular credit card, with a monthly bill and all, but with a $200 limit.

    • DariusC says:

      So let me get this straight. Deposit $200 into an account that you cannot touch and you get a “credit card” with a $200 limit?

      Read that over and consider the difference between that and a debit card. Then, read the definition of credit. It means one party gives the other party resources without the other party giving anything upfront with the promise of paying it back as agreed by the lending party. That’s not credit.

      • Doubting thomas says:

        Snark aside a prepaid credit card does not actually give credit. It does however provide a financial instrument that is used, and recognized in the same way and can be quite useful in rebuilding credit.
        8 years ago my own credit was terrible. I put $300.00 in a secured card and that same card has now refunded my $300.00 deposit and has a respectable limit of actual credit now.

      • KyBash says:

        It’s not credit, but it’s reported to the credit reporting agencies as credit, so it helps you build a score high enough that others will offer true credit cards.

        I got one purely for the purpose of being able to rent a car locally when I needed it (something you can’t do with a debit card). Now I use it to offset my purchases (it can be as much as five weeks between buying something and having it come out of my checking account, so I have a month’s income earning interest).

      • Duke_Newcombe-Making children and adults as fat as pigs says:

        Try renting a car with a debit card. Then try it with a credit card, secured or not. You’ll see the difference.

      • Such an Interesting Monster says:

        It’s a SECURED line of credit. What you get is an actual credit card with a credit limit that acts just like any other credit card and is reported to credit bureaus, unlike a pre-paid debit card which is more like a checking account bank card and doesn’t get reported.

        If you have a house worth $200k and you get a mortgage for $200k it’s not really “credit”? Of course it is, it’s just a secured line of credit.

        Oftentimes if you have an excellent payment history with them they will periodically raise your credit limit beyond the amount you have in the savings account. And after a period of time, usually a few years, you will have the option of going unsecured, at which time they will return the money in the savings account, often with any accrued interest.

        The downside of course is that because it’s a real credit card you need to make regular monthly payments and are subjected to interest charges, overlimit fees, late fees, annual fees, etc. They are a better choice if you’re trying to re-establish credit, but in the long run will likely cost you more than a good pre-paid debit card.

    • I just blue myself says:

      Yep, I’ve got a secured card to help me re-build after some terrible financial decisions. I now get credit card offers. Most people would be annoyed but I smile every time I see one in the mail.

  3. SamEBates says:

    I don’t get it. What benefit do prepaid debit cards have over check cards you get from the bank for your checking account?

    You’re still only spending your own money, but with a checking account you aren’t getting charged a fee.

    • Jimmy37 says:

      Do you still have access to a no-fee, no-interest, no-minimum checking account that gives you a free debit card? Many people don’t, or are just too lazy to find one. Many pre-paid debit cards give you the convenience of charging up at local retailers.

      • SamEBates says:

        I mean, I think I do. I have a checking account with Huntington and I’ve never been charged anything. From your comment I guess that’s not normal.

        • kosmo @ The Soap Boxers says:

          Apparently not, even though I have a personal checking account and an account for my LLC (different banks) and neither account charges any fees. Maybe it varies a lot by location.

    • Such an Interesting Monster says:

      Unless you’re in the Chex system, which means you’re probably unable to open a bank account.

  4. CubeRat says:

    1&2 are only options for people who can handle their finances.
    3 does not take into account today’s reality, that often requires a card. ie: card imprint at a hotel, even if you pay cash. Card needed of online purchases.

    Yes, we would all love to be financially responsible, but I’m sure everyone knows at least one person who cannot seem to do so.

  5. aleck says:

    Suze’s true colors are coming out. Peddling the worst financial instrument for consumers ever created.

  6. thomwithanh says:

    Another thing the first two options don’t consider: many banks (and not just BoA and Citi, we’re also talking about local banks and even some CU’s) now require customers to pass a credit check to open a checking account, which is in some cases as stringent as what they require for their loan and credit card customers. Customers who don’t pass either can’t get an account at all, can only get a savings account (can’t get a debit card) , or in some cases get a second chance account that charges high fees (also doesn’t usually allow a debit card).

    Ten years ago banks only cared if you had unpaid overdrafts or bounced checks in the past. Now an account in collection – even if it has nothing to do with a bank – may make a prepaid card the only option.

  7. backinpgh says:

    People don’t get prepaid debit cards just because. They get them because for whatever reason (bad credit, bad checks, etc.) they cannot get a real debit card from a bank.

    When we went to college my husband and I opened a joint bank account at a local credit union (yes, a credit union did this!). They wouldn’t give my husband a debit card due to lack of credit history, just an ATM card. Of course that was basically the entire purpose of our opening an account, so we closed that one and opened an account at a regular big box bank and they gave him a debit card. I’m sure there are others who are not so fortunate though.

    • thomwithanh says:

      That’s news to me: I haven’t heard of a bank refusing a debit card due to lack of credit history, just a negative one.

  8. Jimmy37 says:

    Credit unions are not the answer since they have some kind of membership restriction. You have to do lots of WORK, a four-letter word that people using pre-paid debit cards probably aren’t used to doing, to find one you can join. And since they usually don’t have many branches, you have to figure out how to get to them. This is hard if you don’t have a car.

    Online banks aren’t the answer also, since you need an Internet connection and computer. You can do this at the library. Then you have to come up with a way to get the money to them, if you don’t have online access to a bank account elsewhere.

    • thomwithanh says:

      And another thing, most (although certainly not all) online banks are arms of high end brokerage firms. If someone doesn’t meet the creditworthiness requirements of a brick and mortar bank there’s no way in hell Schwab or E*Trade will want to do business with them.

      One exception: USAA. You can get a checking account with them even if you aren’t in the military or related to a service(wo)man – just not remote deposit or insurance products. The UPS store will accept their deposits, or you can mail them in, and they’ll take just about anybody who can prove their identity.

      That said, best bet is a small community based credit union, they frequently open membership to anyone living or working in their community and they tend to be much more forgiving about credit history issues.

    • kosmo @ The Soap Boxers says:

      A lot of the credit unions around here are fairly loose with the membership restrictions. Often, you simply have to live or work in 2 or three specific counties.

      The local ones have as many branches as most of the local banks. Not as many as the big national banks, of course.

  9. unpolloloco says:

    This article misses the point of why people typically turn to prepaid debit cards: because they can’t get a checking account. Their only options are cash or prepaid debit. Therefore, those that find cash unworkable (security issues, etc.) use prepaid debit. There aren’t other options!

  10. jp7570-1 says:

    God, whenever I see a photo of Suze Orman, it makes me want to throw up in my mouth a little.

  11. teqjack says:

    “Another alternative is just to do things as they did in the olden days and use cash exclusively. Do this, though, and you lose the ability to shop online.” And you will not increase your credit rating.

    Nor do all “debit” cards charge extra fees. Mine is more than content with the same fees – including no charge if fully paid-up – as a Credit Union Visa/Mastercard.

    And then, there is the reason that I first got a credit card decades ago. My company had arranged an auto rental for me on a cross-country assignment. The rental agency would not let me take out a car unless I provided them with my own credit card, even when I pointed out the billing would be to my multi-billion-dollar company, not me.

    • Not Given says:

      My husband and his coworker were sent to a school, the company paid for their hotel rooms up front. He still couldn’t check in without putting a hold on our debit card.

  12. jeb says:

    I’m curious why the article recommends PerkStreet for an online bank. From looking at their fees (or at least the ones I care about), they seem almost as bad as a regular bank (minus the minimum account balance.) Inactivity fee if you don’t use your account during a month and an out-of-network ATM fee. The out-of-network fee especially irks me…that’s what made me decide not to switch from Ally about a year ago. (I’m now with a local credit union that doesn’t charge that fee and refunds other banks’ ATM fees using reward points that are easy to accrue…could probably refund close to $10/month in ATM fees if needed. Plus their reward program works better for me…$5 gift card every month I use my debit card 20 times.)

  13. skakh says:

    Ms. Orman is simply one unattractive person, on so many levels. That coupled with all of her facke knowledge and prepaid debit card scams is too much to stomach.