Greendot reloadable prepaid debit cards are not gift cards

[eostache]

I did a favor for a friend and told her not to get me anything for it. She insisted and got me a gift card for $150. What she thought was a Visa gift card that she gave me is actually a Greendot reloadable prepaid debit card. I have never heard of these Greendot cards before and didn’t notice them displayed at most department and grocery stores, often right next to the Visa gift cards. A Visa gift card is easy. I have had them given to me in the past. I don’t even recall if there was any need to do any sort of activation on my part. I just took it to the store and used it like any other Visa credit card (until the balance was gone).

Upon opening the package of this card I learned that I would need to go online to activate it. OK. When I got to the website I learned that I would need to provide my full personal information and SSN, etc, in a lengthy process as these are sold by a bank as some sort of account product. Whoa. I’m not doing that for a gift card and I have no need for a prepaid debit card.

These are not gift cards although I think many people buy them thinking they are. I’ve now been reading a lot of reviews online about these cards. Many people like them for their intended purpose. Many other people have huge problems with them even when they try to use them for their intended purpose.

I have not told my friend about this. They don’t need another headache to deal with. (These friends are a retired couple who have health issues of their own, and their adult son who has been fighting testicular cancer for the past year. I looked after their dog when they had to go out of town with their son for a treatment session.)

I have not tried calling customer support (yet). I suspect they will just tell me that I need to register the card to activate it to use it. I have sent a message to the company from their corporate Contact Us page. I’m contemplating my next step.

I found this post from several years ago from someone with a similar issue with one of these Greendot cards that was given to him as a gift card.
http://www.mv.com/ipusers/lsg/Action/Financial/PrepaidCards-Greendot.htm
He ended up writing directly to the CEO to get this resolved. Maybe I need to do that too.

The big problem I see with these cards is that they can be difficult to distinguish from simple Visa gift cards. The packaging of the card that I got did not say on it that it was not a gift card.

[gimp]

Those cards are used to fuck poor people out of money they don't have. It's a goddamn crime.

[eostache]

Those cards are used to fuck poor people out of money they don't have. It's a goddamn crime.

Yes. Absolutely.
I thought that went without saying. heh

[MoneyCat]

Those cards are used to fuck poor people out of money they don't have. It's a goddamn crime.

Yup.  It is an example of the "poor taxes" along with things like check cashing and higher insurance and higher utility costs for living in poor neighborhoods that the impoverished are stuck paying.  It is extremely hard to escape from poverty because of this kind of stuff.

[tariskat]

Why? Are there extra fees associated with it?

[dandarc]

These types of things also can be used to manufacture spend if you're into playing the credit-card rewards game.  Not as easy now that Wal-mart is apparently not accepting all debit cards for money orders and such, but can still be a part of the fun.

[dandarc]

Why? Are there extra fees associated with it?

Yeah - typically it costs something like $4.95 to 6.95 to load them on top of the money you put on the card.  Depending on how you get the money off of the card, it may or may not have fees there too.

The stated use for these things is for people who for whatever reason don't want to or can't use a regular bank.  Which is pretty stupid considering these cards are typically run by the biggest banks there are, and have about the same functionality as an extremely expensive checking account.

[Edit - fix typo]

[MoneyCat]

Why? Are there extra fees associated with it?

Yeah - typically it costs something like $4.95 to 6.95 to load them on top of the money you put on the card.  Depending on how you get the money off of the card, it may or may not have fees there too.

The stated use for these things is for people who for whatever reason don't want to or can't use a regular bank.  Which is pretty stupid considering these cards are typically run by the biggest banks there are, and have about the same functionality as an extremely expensive checking account.

[Edit - fix typo]

Generally, what happens is that poor people who are living on the very edge will overdraw their checking account numerous times with $20-$35 fees (depending on the bank) for each NSF because they don't make enough money to have any kind of cushion and simple mistakes rapidly turn into disasters.  Then, they get flagged by Chexsystems when they can't pay the snowballing negative balance, so they can no longer have a checking account at any bank.  They turn to prepaid debit cards so they can pay for bills without paying "per bill" fees at the supermarket or wherever they have a bill payment terminal.  However, prepaid debit cards have a range of fees for loading money onto them, withdrawing money from the ATM,  and checking your balance, and they often have small fees per transaction that build up over time. 

[dandarc]

Why? Are there extra fees associated with it?

Yeah - typically it costs something like $4.95 to 6.95 to load them on top of the money you put on the card.  Depending on how you get the money off of the card, it may or may not have fees there too.

The stated use for these things is for people who for whatever reason don't want to or can't use a regular bank.  Which is pretty stupid considering these cards are typically run by the biggest banks there are, and have about the same functionality as an extremely expensive checking account.

[Edit - fix typo]

Generally, what happens is that poor people who are living on the very edge will overdraw their checking account numerous times with $20-$35 fees (depending on the bank) for each NSF because they don't make enough money to have any kind of cushion and simple mistakes rapidly turn into disasters.  Then, they get flagged by Chexsystems when they can't pay the snowballing negative balance, so they can no longer have a checking account at any bank.  They turn to prepaid debit cards so they can pay for bills without paying "per bill" fees at the supermarket or wherever they have a bill payment terminal.  However, prepaid debit cards have a range of fees for loading money onto them, withdrawing money from the ATM,  and checking your balance, and they often have small fees per transaction that build up over time. 

Ah - so it is potentially a better choice than the alternative for some people.  I once had someone at a bank tell me that "I couldn't get an account anywhere" due to one over-draft - I had called to complain about the fee because had they processed the transactions the day that went through in a different order, I wouldn't have been over-drafted in spite of my error - my "actual balance" never went negative, just the available.  I forgot to cancel my renters insurance when I moved and I was living a lot closer to the edge then.  Had no problem opening an account at the first place I tried, if I recall correctly.  I suppose if I really had no money, this could have spiraled quickly.

[tariskat]

Why? Are there extra fees associated with it?

Yeah - typically it costs something like $4.95 to 6.95 to load them on top of the money you put on the card.  Depending on how you get the money off of the card, it may or may not have fees there too.

The stated use for these things is for people who for whatever reason don't want to or can't use a regular bank.  Which is pretty stupid considering these cards are typically run by the biggest banks there are, and have about the same functionality as an extremely expensive checking account.

[Edit - fix typo]

Ahh... That sucks.