Photo (cc) by Imeh Akpanudosen
This post comes from partner site lowcards.com.
Last week, the Kardashian prepaid debit card was abruptly pulled from the market by the issuer due to poor sales, negative publicity, and high fees. (See Kardashian Kard Already Kaput.) But the Kardashians were not the only “celebrities” being used to promote prepaid debit cards to young adults.
Now we’re seeing cartoon characters.
On Dec. 1, Myplash ( http://myplash.com/getacard ) started selling Teen Prepaid MasterCards – coinciding with the holiday season. Launched by Plastic Cash International, there are almost 100 different card designs with cartoon characters, movie characters, athletes, and musicians. These images include So So Happy, Skelanimals, Paul Frank, Emily Strange, Plain White Ts, Rich Boy, Flo Rida, surfer Kassia Meador, and characters from “Twilight Saga: Eclipse.”
Myplash gift cards with images of the Twilight characters went on sale in the summer of 2010. The company uses this branded content to connect with teens and young adults “in a cool and relevant way.”
Fees for the Myplash cards are lower than fees for the Kardashian Kard, but they still add up. The activation fee is $6.95. The monthly fee $4.95. The reload fee from a credit or debit card is $4.95 (there’s no fee for direct deposit reloads). The ATM transaction fee is $1.50 per withdrawal.
There’s a $1.95 fee for inactive accounts and $2 fee for a paper statement. Disputing a transaction costs $15 per transaction. Electronic bill pay costs 50 cents per transaction. Contacting a customer service agent will cost $1.50 by email and $1.95 to speak with a live customer service agent (free for first three minutes). Transferring money to another Myplash card costs 50 cents per transfer. Text message and email alerts are free.
Myplash requires teenagers ages 13 to 17 to have parental consent and agreement to the terms and conditions.
“There is nothing illegal about using cartoon characters to promote a financial product to teens, but it sure bothers me as a parent and seems to cross over the line of what is good taste,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “It seems that prepaid cards are trying to fill the void for credit cards for teenagers and young adults that was created by the CARD Act. These regulations made it difficult for anyone under 21 to get a credit card. It is much easier for teenagers to get a prepaid reloadable card. Issuers are using celebrities, cartoon characters, and personalization to attract teenagers.
“If you are too young for a credit card, or have poor credit, then a prepaid reloadable card is one of your options. But you may be much better off getting a debit card with your checking account because the fees are much lower. If you get a prepaid card, make sure you compare the fees and find a card that reports to credit agencies. This can help you build or re-build your credit score.”
Prepaid cards are primarily marketed to people with little or no credit, damaged credit, or young adults. Prepaid reloadable cards look and act like a credit or debit card, including personalization with the name of the user. The credit limit is set by the amount of the deposit. It’s not a loan and doesn’t accrue interest charges. They’re used everywhere that debit cards are accepted, even for international purchases. Prepaid reloadable cards are subject to account holds at gas stations, restaurants, hotels, and car rentals, just like debit cards. The cards usually carry significant fees such as processing fees, monthly fees, transaction fees, and extra ATM fees.
“While reloadable prepaid cards may sound like a good alternative to debit and credit cards, the fees make them very costly,” says Hardekopf. “The issuers of prepaid cards make all of their revenue from the fees. The regulations that restrict fees for credit and debit cards do not apply to prepaid reloadable cards.”