Sunday, March 15

Sponsored Post: ExtraCreditCards.com

I was asked to look over a site called Extra Credit Cards – specifically the Prepaid Debit Card section of the site. While I don’t accept every request for a review, I made an exception for this site, which I’ll discuss further on.


As most of you may know, the idea behind prepaid debit cards is pretty simple: It offers you everything a normal debit card has… except that you aren’t allowed to overdraft. This may be appealing to those of you who have particular problems with overdraft fees. (Or if you want to teach a teen or pre-teen how to stay within spending limits, this may be a product you’ve considered.)


Most of us – even the big-time PF bloggers – have wrestled with overdraft fees in the past. At $28-32 each, they can have quite a devastating effect on your account balance. In fact, I have known a few people to completely eschew bank accounts because of the money they lost to overdraft fees.


The problem with that method, however, is that you then end up paying check-cashing fees. These vary with the amount of the check, so the bigger the check, the more you are penalized.


Eventually, someone perceived this dilemma and created the prepaid debit card to fill the need.


While these cards can be useful for the aforementioned reasons, I don’t want to gloss over what they are. In fact, to be brutally honest, these are not prime options. At least, they shouldn’t be. Prepaid cards are a business proposition, and so have a lot of fees attached to them. That’s not to say that they are always a bad idea; for some people, they are a saving grace. But if you can get a copy of Quicken, write yourself notes, or otherwise find a way to better track your spending – thereby avoiding overdraft fees and/or ending up in ChexSystems’ database – I suggest you try that before a prepaid card.


Still, if the alternatives fail to keep overdrafts away, or if you’re already flagged in ChexSystems, prepaid debit cards may just be the answer you need. Even after you have paid off whatever debt put you on ChexSystems’ radar, there will be a year before most banks will consider you. In that time, you could pay an awful lot of check-cashing fees. So if you choose carefully, a prepaid debit card may be well worth the money. Even with its set of fees, a prepaid debit card will generally be a far better investment than a never-ending set of overdraft or check-cashing charges.


So, enough with the generalizations. Let’s look at the particulars. ExtraCreditCards.com offers three different prepaid debit cards: Vantage Debit Mastercard, Ready Prepaid (Visa), and Greendot Prepaid Mastercard. I created a chart to help you more easily compare them against one another:




Vantage

Ready

Greendot

Activation

$9.95

$9.95

$9.95*/ $29.90*

Activation waived?

Yes w/ DD

No

No

Cash back?

$3 w/ $300+ load

No

No

Monthly charge

$9.95

$4.95/$8.95

$4.95/ $9.95**

PIN purchase

Free

$0.95/free

Free

Signature purchase

Free

Free

Free

Online access

Free

Fee

Free

ATM balance check

$1

$0.5/ free w/ DD

$0.5/Free

ATM withdrawal fee

$2

$2.25

$0.99/Free

Paper statement

$2.95

$2

Info not available

Phone balance check

$0.50

Free

$0.75/Free

Talk to a rep

1 free, $2

1 free/month, $2

Free

Online bill pay

Free

$4/free

Info not available

Cash w/ purchase

Free

Free

Free

Cash advance

$4.95

$5

Info not available

Credit builder?

Info not available

W/ online bill pay

No




*Current $5 off offer




**Extra $5 waived w/ $750 load

A couple things to note:

  • DD stands for direct deposit
  • Vantage offers $3 cash back on many in-store transactions. But most retailers will charge $3.50-$4.95 to load the money. The exception (for Vantage, at least) is Western Union, which is free if you load at least $300.
  • You’re going to want to be comfortable checking your account online, or the fees will add up quickly.


It should be clear from the chart above that each of these cards works best for different categories of people. If you don’t have direct deposit, but you are close to a Western Union, you’ll probably want to go for the Vantage Card. This is the best way to avoid the loading fees. If, however, you have direct deposit, you have the option of building up your credit history with ReadyDebit. Finally, if you know that you’re simply more comfortable talking to a live person, you should probably choose the GreenDot card, since you can avoid fees that way.


I know that many of us with bank accounts and credit cards may not understand people who choose to get prepaid debit cards. But most of us probably know someone who is a habitual overdrafter. If you assume even one overdraft a month (on average), that friend of your could be overpaying. After all, one overdraft fee pays for at least three months’ of monthly fees on a prepaid card.


Even if people aren’t overdraft-prone, they could be in ChexSystems’ database. If this happens, most people turn to check-cashing franchises. But with fees at 3% or more, someone making $8 an hour would be paying at least $30 a month just to access their earnings! Comparatively, a $9.95 monthly fee seems like a pretty decent deal.


This may also be a good way to teach your child or teen about responsible debit use – without the fear of overdraft fees piling up.


But I actually didn’t agree to this review because I’m big on prepaid cards. As I said, I do hope people will use them only when they’ve exhausted the other, better alternatives. In fact, I have turned down other requests to review products, because I don’t want to be seen as a shill for random companies.


This particular site intrigued me, though, because it’s unlike many of the other card-hawking sites I’ve seen. Most card sites you see are pretty blatant. They have categories of cards that you can use: bad credit, low APR, cheap balance transfers, etc. That’s the sum-total of the content. And that’s perfectly valid.


What intrigued me about ExtraCreditCards.com, however, is that it went further in its efforts. Of course, you should always remember that businesses are there to make money, not to be your friend. Still, this site had a relatively surprising amount of information about cards.


  • It has a glossary of terms, which can be helpful. (I’m embarrassed to say, I was misinformed about what a secured card was. So I did learn something.)
  • It has an index of various industry news articles, tracking overall trends in credit cards.
  • It has some informative articles about various credit card issues – trading penalties for fees (prepaid cards), how two Capital One cardholders dealt with recent credit hikes, etc.
  • It explains “trailing interest,” which was a term I hadn’t heard before.
  • It also informs about issues such as whether or not to sign your card or to write “Ask for ID.” I thought this was a particularly useful issue that most card sites don’t deal with.
  • It even has a short history about credit cards. It was a little briefer than I expected, but nonetheless interesting.
  • It even has a “Common Myths” section. I very much hope you already know the correct answer to these. If not, be glad I sent you there!


At any rate, I thought ExtraCreditCards.com was worth noting, for the simple fact that it did take some time to be informative. That’s becoming far too rare, in my opinion.


That said, let’s not pretend the site is there out of pure desire to inform the masses. The site owners will make money if you find a card you like and apply. Neither should we pretend that I wrote this piece purely out of amazement. I was offered compensation for this review.


Still, with the ulterior motives out in the open, I do believe that I made the right choice in accepting this review opportunity. It is a useful site, which may just educate you – or, at the least, help you find a credit card that fits your needs.


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