Credit Cards

Tips, news, reviews, caveats, trends, updates and analysis related to consumer and business credit cards, and prepaid debit cards. From the interest rate specialists @ FedPrimeRate.com

Friday, July 24, 2009

The Current by Discover Card: A New Prepaid Debit Card from Discover Financial Services

Current by Discover
Current by Discover
We've added the new Current by Discover prepaid debit card to our prepaid lineup.

An Excellent Card for Teens

Prepaid credit or debit cards are very useful as teaching tools for introducing teens to the world of money and helping young adults learn about managing their money wisely.

With this new prepaid card from Discover, the fees are reasonable, but we were really impressed with the parental controls that are included with the card. Parents can:

  • set monthly, weekly or daily spending limits. Lots of parents will appreciate this feature, especially if they have kids who need time to learn about budgeting and the pitfalls associated with overspending.
  • get activity alerts via email or text message. Great for monitoring how a Current card is being used -- and there's no extra charge to use this feature.
  • restrict a card so that it can't be used at certain locations, like tobacconists, motels or beer distributors.

Other features we like:

  • There's no charge for funding the card
  • No minimum balance requirement
  • Free Direct Deposit, and there's no charge for depositing funds via a credit card or a bank account.
Users of the Current by Discover card can withdraw cash for free four times per month. Additional ATM transactions will incur a $0.50 charge per transaction.

A $3 fee is assessed for replacing a lost or stolen card, or for changing to a new card design.

Though the Current card has no minimum balance requirement, each card needs to be funded with at least $20 when a new account is opened.

The membership fee is $5 per month, but if you pay for a year's membership, the fee is $50 (a $10 discount.)

A parent can have up to 3 Current by Discover prepaid cards in their account, and each card has a funding limit of $2,500.00.

COUPON: When you sign up, use coupon code BT709 to get your first month of membership free. This coupon expires on May 30, 2010.

In this deep recession we're in, it's more important than ever to teach young adult about spending money wisely. Discover's new prepaid card is a timely payment solution that parents from all walks will appreciate, and I'm willing to bet that it's on its way to becoming the most popular prepaid debit card in the American market.

Oh, and the Current card has some very cool designs to choose from. Enjoy!

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Friday, July 03, 2009

Advanta Settles with The FDIC Over Fair Trade Violations

Advanta Business Credit Card
Advanta Business Credit Card
Here's some good news for all those who used to have an Advanta business credit card account. As you may already know, Advanta shut down all business credit cards accounts on May 30, 2009. No account was spared. Small business owners who relied on their Advanta credit cards to buy equipment, inventory, etc. were forced to find new sources of temporary financing in a hurry. This, of course, made lots of cardholders very angry, since business credit cards and lines of credit are not easy to find in the current credit crunch and recessionary economic environment.

To add insult to injury, Advanta also raised the interest rate on many accounts without providing fair warning. This happened with my own Advanta Platinum Businesscard account. Advanta ended my 0% intro APR period early, and without warning. Moreover, I'm still calling Advanta every week, as I'm trying to resolve a problem with an opt-out correspondence. All very vexing stuff.

So here's the good news: Advanta has settled with the Federal Deposit Insurance Corporation (FDIC) over fair trade violations related to business credit card accounts. Bottom line: if Advanta modified your interest rate without fair warning, you may eventually receive a restitution payment.

Here's a clip from Wednesday's press release:

"...Under the settlement, Advanta has agreed to an order to cease and desist, to pay restitution, and to pay a civil money penalty in the amount of $150,000. In addition, restitution of approximately $14 million will be paid to businesses that used Advanta's Cash Back Reward program and $21 million to accountholders whose accounts were repriced. In agreeing to the issuance of the order, Advanta did not admit or deny any liability.

Advanta's 'Cash Back Reward' program advertised a percentage of cash back on certain purchases by business credit card accountholders. Due to the tiered structure of the cash back payments, however, the advertised percentage was not available for all purchases. As a result, it was effectively impossible to earn the stated percentage of cash back reward payments. The FDIC concluded that the Bank's solicitations were likely to mislead a reasonable customer and that the representations were material and that therefore, the Bank engaged in a pattern of deceptive acts or practices in violation of Section 5.

In addition, numerous complaints were filed regarding Advanta's substantial annual percentage rate (APR) increases on the accounts of small business owners and professionals, who had neither exceeded their credit limits nor were delinquent in making payments on their accounts. The FDIC determined that Advanta's rate increases had been implemented in an unfair manner, that Advanta failed to adequately notify accountholders that their APR had increased, the amount of the increase, the reason for the increase, the procedures to opt-out and the consequences of an opt-out. The repricing caused substantial injury to customers, withheld and/or provided inadequate information that could have enabled the customer to reasonably avoid the injury, and provided no benefit to the customer or competition.

'The Advanta settlement demonstrates the FDIC's commitment to having banks take responsibility for ensuring that they do not engage in unfair or deceptive acts or practices in connection with the banking products and services they offer,' said FDIC Board member Thomas J. Curry. 'Any person doing business with an insured depository institution can expect to be treated fairly, and any such entity that engages in unfair or deceptive acts or practices should be aware that the FDIC will pursue such practices with all of the legal authority at our disposal.'..."

OK, so here's an example of one of the worst credit cards ever:



Yup.

I now pose this question to readers: is Advanta the worst business credit card bank ever? As always, your comments are very welcome, and appreciated.

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