Quick Credit Cards

I don’t know about you guys, but I’ve been noticing an increasing trend lately that I’m not completely on-board with yet. Retailers who use rebates to lure us in are moving from a paper check to a prepaid debit card, and it’s not just retailers, either. Unemployment checks are on the decline, Instead, unemployment offices seem to be handing out reloadable debit cards when an applicant has been awarded unemployment. Each time they get paid, the card is loaded rather then cutting a check or sending a direct deposit.

After researching this a little more, I found a great article on why companies are doing this over at creditcards.com. You can read their article here.

As for my thoughts, let’s talk about the pros and the cons.

Pros

I try to be an optimist in these types of situations, so let’s start with the good.

# 1 – Less Paper

I’ve been working on making my life a little more green, and while I have a long way to go, I appreciate the fact that using these debit cards eliminates some paper usage…sort of. Some retailers decide to use more mail fillers to market their target audience, so I’m not referring to them. But, overall, issuing a prepaid debit card instead of a check does save on paper.

# 2 – Convenience

Getting a card in the mail means you don’t have to make a trip to the bank in order to use the money. You simply activate the card, if required, and go. Makes it nice and simple.

# 3 – Quicker Turn-Around Time

One good thing about getting the cards as opposed to the checks is that you get your money a little faster. It used to be that it would take anywhere from 6-10 weeks to get a paper check, what with the retailer needing to verify if you’ve met the requirements, processing the rebate, cutting the check, and then mailing it out. The debit cards streamline that process a bit more.

# 4 – Faster Processing On Lost Cards

Inline with getting your money faster, if the card is lost or stolen, the processes for having it replaced seems to be much easier as well. I’ve never personally experienced this, but from what I’ve been told, the wait time is much less than if the retailer issued a check because it’s all electronic.

I’m sure there are more pros to these cards, but in truth, I’m not a big fan so I find that I tend to see the cons a little more clearly. Perhaps readers can give us a few more pros that I’m missing?

Cons

And now let’s look at the downside of receiving these prepaid debit cards from both retailers and unemployment agencies.

# 1 – Difficult Access To The Money

Some of these cards make it difficult to access the money that is rightfully yours. Many retailers wish to keep the money they issue as a rebate in-house, so they won’t allow you to use the card with any other retailers, only within their stores. Other retailers make it difficult to access remaining cash on a card if it’s been used previously because you have to find someone who knows how to do a split tender transaction, or that allows such transactions. Surprisingly, this is not commonly taught in retail.

# 2 – Some Come With A Ton Of Fees

Aside from the fees that could be incurred just from trying to access the card, there are also maintenance fees to watch out for if the card is not used within a certain amount of time. Some even have penalty fees for using it outside the intended network. Then there are ATM fees to consider, as well as cash advance fees if you’d like to access the money that way.

# 3 – Expiration Dates

As if retailers haven’t made it challenging enough to accept these cards, they tack on a expiration date. I’ve lost out on several rebates myself because of this one. It is very easy to stick the plastic in your wallet and forget about it. If you don’t use the money by the expiration date, and provided there are no maintenance fees slowly eating away at your balance, you lose that money. The company is not likely to issue you another card.

# 4 – Benefits Lost

I actually have to credit Erica Sandberg over at creditcards.com for this one because I didn’t even think about, but it fits here so I’m repeating it. When you use these prepaid cards to make purchases, you’re missing out on the opportunity to gain reward point, airline miles, or other benefits you may receive if you had been using your credit card. While for some this may not be a significant issue, it is still a con as it relates to using the prepaid debit cards.

For myself, I don’t get rebates often enough to do much more then grumble when I get the card. I’ve actually been lucky, the few I’ve gotten have had no fees for cash advances, and since I work at a credit union, I’ve just done the cash advance to deposit to my account. It’s worked well. But, I have a member that we affectionately refer to as Mr. Rebate because he’s in at least once a week with a new stack of rebate checks. The frequency has started to slow down some and when we asked he said it’s because he’s getting rebate cards. He’s not a fan, he thinks it’s just one more way retailers make it difficult to get the rebate in the hopes that you won’t use it and they get to keep the money.

So, what are your thoughts on this growing trend? Do you think they’re a positive contribution to consumers or simply a devious plot by the retailers? Perhaps a little less dramatically, do you have any other pros or cons to add to the list?

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