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From The Grio — What do Russell Simmons, Kim Kardashian, Lil Wayne, Tom Joyner, Suze Orman, George Lopez, and now BET have in common? They all have their own or have endorsed a prepaid debit card.

Yes…they have all jumped into the prolific market which targets working class and low income families promising to give them all the luxurious privilege of spending money to use their own money. BET has joined the ranks of those who expect people spend their money using a “glorified gift card” as they are called by John Ulzheimer, President of Consumer Education at SmartCredit.com.

The prepaid card is one that doesn’t help anyone establish credit, costs far too much for those who have limited budgets, and, because they allow those who use them to remain outside the banking system, too often insert the user into a permanent underclass of society, unable to progress economically.

BET has partnered with NetSpend (NTSP) to endorse their Control Card that promotes the following perks.

No credit check
No overdraft or other surprise fees
No interest or late fees
No standing in line to pay bills
A $10 Purchase Cushion
A 5 percent APY Savings Account
Life Benefits

That sounds pretty good to the naked eye, but as I have done with many prepaid cards before, let’s take a look at each “perk” to see if they are really benefits.

No credit check: This is a prepaid debit card which is the same as using cash. You will never have a credit check to use your cash so you will never have a credit check to use a prepaid debit card.

No overdraft or other surprise fees: I wouldn’t know about that because I couldn’t see what all the fees were unless I purchased the card…surprise! To see a complete list of the fees I could find, see the end of this article.

No interest or late fees: These cards are not extending you a line of credit. Hence, they are not helping you establish credit. Therefore, there is no need to charge you an interest rate or charge a late fee since you are only using your own money and not borrowing any money.

No standing in line to pay bills: Is this any different from any other free form of online payment?

A $10 purchase cushion: If you take the time to read the fine print in this “perk” they make it very clear this is a “non-contractual courtesy exercised in our sole discretion, by which we may approve transactions that the Control Card cardholder requests from time to time.” Translation — they are under no obligation to give you this cushion if they choose not to, so if any user finds themselves having to use this cushion frequently, they can deny you!

A 5 percent APY savings account: To have access to this feature, you must have deposited at least $500 in one calendar month. This seems like a high interest rate until you remember you are being charged at least 10 percent monthly on a deposit of $500 just to earn 5 percentyearly. That doesn’t make much sense, and is a great deal for the bank. By the way, if you are one of those who had the brilliant idea of putting a large sum of money into this account and using it as a high yield savings account just to get access to the 5 percent return that is offered, there is a clause in the fine print that states “a cap may be placed on the maximum amount of funds on maintained in the account.”

It also states the cap can change, which means in no uncertain terms, in my opinion, would they allow someone to put an excessive amount of funds into the account to earn an exorbitant amount of interest on their funds. I am sure they are not too concerned about having to implement this cap because those who use these types of cards are typically in the low income category; however, this clause hidden in the fine print I am sure was inserted to protect their interests.

(Continue Reading @ The Grio…)

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  • Val

    If you’re brain dead enough to watch BET then you’re likely brain dead enough to fall for this scam.

    • pink

      BET has some good programming. The key word here is SOME. Overall they are no worse than a lot of junk that is on other networks

  • Ocean Blue

    Prepaid Debit Card = No good.

    The people who get prepaid debit cards are the same who get payday loans.

  • I’ve been fortunate enough to never need a car or payday loan but in the past six months, I got clients who requested copy (promotional articles) for both (as well as one to sell gold and coins).

    In doing my usual research, it tripped me out how some people will get over on those who’ve fallen on hard times.

    The car loan was the worst because the company claimed that their services would help users to re-establish their credit.

    And the thing is, except for Gremlin Wayne, most of the people listed in the article are respected in their brand and target the working-class because most of them came from humble beginnings before achieving success.

  • Leo the Yardie Chick

    I’m cardphobic. I signed up for a regular debit card just last year just so that I could purchase supplies on-line without having to ask my card-holding relatives (I hated doing that!), and I went over the fine print like I was studying for an exam before I signed off.

    What can I say? I’m super-cautious when it comes to my money, and these too-good-to-be-true deals are just out to drain you dry.

  • pink

    Why don’t they teach people to save money in savings accounts (instead of always spending on consumer junk,i.e.,shoes,purses,tennis shoes, etc)? It’s much more advantageous to invest in the stock market long term, and contribute to a 401K plan (if you are lucky enough to work for a company that offers 401Ks….especially if a company is going to give you $1 or 50 cents for every dollar you invest). Black folks are now preying on other black folks!!

    • RL

      I’m sorry, but your comment rubbed me the wrong way.

      For one, the people that this card is being marketing to most likely don’t work for a company that offers 401k (if it does they probably aren’t working full time to qualify for benefits). If there was money to be made in scamming the educated/financially literate and high earners, I’m sure they would, but there isn’t. The people this card is being marketed to probably have bad to no credit, are distrustful of banks, but want to keep up in the world (plastic is seen as status in some low-income communities when a lot of people deal in under-the-table or black market cash). They plain just don’t have the financial know-how to avoid being taken advantage of.

      Two, there are plenty of organizations that strive to increase financial literacy, everyone just doesn’t take advantage of them. Saving and investing is good, but please remember that an economy depends on spending, money sitting in a bank doesn’t give you or anyone else a job. I don’t think you can denounce how people spend their money without criticizing the entire materialistic/consumerist culture, which itself is a main force in our capitalistic system.