(US money blog): RushCard disruption reveals why prepaid debit cards should not exist at all

[unhappycamper]

http://www.theguardian.com/money/us-money-blog/2015/oct/25/rushcard-disruption-perils-prepaid-debit-cards

Thousands of customers were unable to access their money, but observers say it is the banking industry that has stopped serving those who are ‘too poor’

RushCard disruption reveals why prepaid debit cards should not exist at all
Suzanne McGee
Sunday 25 October 2015 08.00 EDT

It’s a sad truth of American life that the poorer you are the more you pay for banking. And as thousands of Americans have discovered this month, it can also be very perilous to live outside the mainstream banking system. But there may be a solution on the horizon – one unused since the 1960s.

Thousands of holders of one of the most popular prepaid debit cards in circulation, the RushCard, founded in 2003 by hip-hop mogul Russell Simmons, found themselves unable to access their funds for the better part of two weeks. Blocked from buying groceries and medication, getting hold of cash they needed to pay their rent or purchase gas for their cars, they have been venting their fury at both the card and the organization on social and traditional media.

There are certainly plenty of reasons for RushCard’s holders to be livid, especially given the initial vague response: the company blamed a “technology transition”, while Simmons himself simply said he was “praying” for those affected, in a since-deleted tweet.

But this isn’t a problem limited to RushCard. The Pew Charitable Trusts reported in June that about 23 million Americans use prepaid cards such as RushCard regularly, up about 50% between 2012 and 2014, with many treating them like bank accounts and having their pay checks directly deposited to the card. That backfired badly when those direct deposits went through, only for cardholders to find that their money is now in limbo, inaccessible.

[Turbineguy]

1. Banks are competing

to screw customers.

[w0nderer]

2. everytime i read an article like this

i keep remembering 'it's a wonderful life' (the movie)

and i think
that's why credit unions were originally started from what i understand

it's sad that it seems so hard to start stuff like that up now adays

it shouldn't take more than a neighborhood getting together
https://en.wikipedia.org/wiki/Microcredit is something that almost all countries support in Africa, Asia and so forth
why not for the poor and working poor in their own countries?

(i know...no profit) but see i disagree, if a bank treats me badly when i'm poor, i won't go there when i have money (and i know, the US doesn't have a lot of economical movement range (despite all the nice Alger propaganda)).

but still, alienating a customer is almost always a bad idea

even worse is when SS or food supplements will only be given out on debit (prepay) cards and they have fees on them
so the supplement one DOES get gets eaten away by fees but you can't take it out cash or check (even if you do have a bank account to deposit the check into)

seems to me most bankers are close to vampires, apologies to any vampires for the comparison

[Downwinder]

3. Bring back Postal Banking.

[appal_jack]

5. Yes, this. k&r, nt

[w0nderer]

6. what was postal banking?

i've heard of it, but am hesitant to google it due to probable 'bias'

i know postal banking in nordic countries, heck even some coop/member store/stores have bank/credit unions
and do pretty good (say 5% discount buying in store no fee on checks and .5% interest (a lot for europe))

[Downwinder]

13. Follow the OP link and read the whole Guardian article.

[w0nderer]

14. i did read it, i wanted more info n/t

[Downwinder]

15. The Post Office Should Just Become a Bank

http://www.newrepublic.com/article/116374/postal-service-banking-how-usps-can-save-itself-and-help-poor

[Erich Bloodaxe BSN]

4. "with many treating them like bank accounts and having their pay checks directly deposited"

Not quite - from what I understand, a number of employers have moved to paying employees in the form of pre-paid debits that rack up extra fees for those simply trying to get at their own money. So it's not quite a 'choice' on the part of the employees to 'treat the cards like bank accounts'. Just another rip-off orchestrated between employers and those who issue the 'pay cards'.

[w0nderer]

7. dunno bout US

but in Europe it's cheaper to direct deposit than issue a check

[Erich Bloodaxe BSN]

8. It is cheaper for the employer.

Which is why they'd rather do it. They get great rates from the people who run the debit card setup, but then the poor people using the cards get hit up for fees even for simply withdrawing their money from the card.

[w0nderer]

9. Right

(actually in europe it's cheaper all around)

but in the US it's cheaper for Employer
that's what i meant Erich
sorry for not clarifying


probably the employer in the US already gets kickback somehow on fees

[Erich Bloodaxe BSN]

10. I wouldn't be surprised on the kickbacks either.

No doubt done in such a way as to be 'legal', even if unethical. That's the way most of American business rolls.

[w0nderer]

11. wait you believe

that rich people will F... you at every chance...???? what are you paranoid?
or realistic!

[Erich Bloodaxe BSN]

12. I believe that the vast majority of folks work for themselves first, their friends and family second

and so on in ever widening arcs, until they do the least for the majority of folks. It's understandable human nature. And it's the reason government should work to protect everyone from the ensuing results of human nature. Rich people aren't trying to screw with me. They don't even care about me. They're just trying to gather as many resources and as much power for themselves as possible. And because they're rich, they can tilt the board in their favour every time, unless there's some entity that works to relevel the board for the poor.

[FrodosPet]

16. Does it cost more than $8?

Chase is charging $8.00 for non-customers to cash paper checks.

Most check cashing places (party stores, etc) charge something similar.



Sanders 2016

[w0nderer]

17. some banks

offer free checking account (waive maintenance fee) if you do a monthly direct deposit


check credit unions as well
http://www.culookup.com/

but it comes down to your employer's willingness to do this as well

[Travis_0004]

18. Poor often don't have direct deposit as an option

Some companies do not issue checks, yet for some getting a bank account is impossible.

[w0nderer]

19. very true

for me it wasn't an option, not cause i don't have a credit union account, i do
but cause company direct deposit would only work on a bank that would then charge me


and for some people (bancrupcy and debt and a thousand other reasons) banks and creditunions wont issue accounts

credit unions are usually a little more lenient