Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

News Now

Consumer
Say no to celebrity debit cards
MADISON, Wis. (12/6/10)--Prepaid debit cards are hot. Worth $330 billion in 2009, their collective value is expected to triple in the next two years (Mercator Advisory Group Nov. 2010). They’re also convenient. Using a debit card is a more streamlined transaction than writing a check. Governments prefer to issue prepaid debit cards for payments such as unemployment and Social Security benefits to people who don’t use financial institutions. Debit cards also can be very profitable, especially when issued to young consumers. This market has become of greater interest to banks, given new restrictions on issuing credit cards to minors under the CARD Act of 2009. This has led to a worrisome marketing tactic—the release of “celebrity-branded” cards. Recently, for example, MasterCard announced a new prepaid debit card, dubbed the “Kardashian Kard” because it carried the likenesses of reality TV stars Kim, Khloé, and Kourtney Kardashian. Its intended market was teenage girls. Unfortunately celebrity endorsements don’t always mean consumer savings. Within days of the launch announcement, negative publicity led to the Kard’s “kancellation.” (American Banker Nov 30). Objections centered on two dangers characteristic of prepaid celebrity debit cards, according to experts at CUNA’s Center for Personal Finance:
* High fees. Consumers Union, publishers of Consumer Reports, cited 12 potential debit card fees, including point-of-sale transaction fees and balance inquiry fees. Celebrity-endorsed cards can be particularly aggressive in this regard. Consumer writer Annie Lowrey (slate.com Nov 19) constructed a plausible scenario in which a $1,200 prepaid six-month Kardashian Kard generated $80 in fees compared with fees of “somewhere between zero and $36” for a debit card linked to a conventional checking account. * Uncertain loss protection. Prepaid cards are as good as cash, and don’t carry the same protections as standard debit and credit cards. When lost, all of their current value is at risk, with no guarantee that the consumer will get it back. In comparison, your liability for a lost or stolen conventional debit card is limited to $50 if you notify the card issuer within two business days.
A debit card account will be safer and far less expensive to use than a prepaid debit card, with or without a famous person’s endorsement. Generally, as with most financial products and services, you’ll find the best deal on a debit card at your local credit union.
Other Resources

RSS





print
News Now LiveWire
CUNA: CUNA offices closed through Friday, News Now returns Monday http://t.co/a5xbLzQKDj
22 hours ago
Reminder: @CUNA's Madison, D.C. offices will be closed through Friday, open again on Monday. #NewsNow will publish Monday.
1 Day ago
MI dentist to match @CUDirect's $20K to @HurleyMedical as a result of #20for20 online voting http://t.co/hqmIc9LpK1 @CMNHospitals
1 Day ago
New #creditunion chartered in St. Louis - #LutheranFCU - by @TheNCUA http://t.co/faPfANGS0P. Only 3rd new FCU charter this year.
1 Day ago
Don't get hacked during the holidays-use these tips from @CUNA http://t.co/jEqxni6NhO #StoptheDataBreaches http://t.co/woIxPOIyys
1 Day ago
150x172_Sign up for election newsUnite for Good Share your Stories100 Million CU Memberships