Consumer Reports has released a new ranking of prepaid cards, but the rankings focus primarily on fees and ignore some important facts of the prepaid card business.
Among the prepaid cards reviewed by Consumer Reports (see the Ratings charts below) four stand out as being highly rated: American Express-Walmart Bluebird was among the top four because it charges no monthly fee and offers some great services, such as bill pay and free access to in-network ATMs.
The laudatory paragraph about Bluebird ignores the facts that not everyone has easy access to a Walmart store, particularly people who live in urban centers. It also takes no account of the fact that the ATM network used by Bluebird may not be the most convenient for all customers.
Consumer Reports also calls for more regulation on prepaid cards ignoring the regulations already imposed on the industry by the banking regulators and the rules imposed on the cards by the payment networks. While there may be room for some changes, 900 pages of regulations that sweep up everything from PayPal to Venmo and seek to regulate every aspect of the business will likely reduce access to financial services for the very people the rules are designed to protect.
One gap in Consumer Reports’ analysis is that is says that RushCard should no longer be considered by people shopping for prepaid cards because of the glitch it suffered while changing processors.
We should point out that we are not currently recommending the Prepaid Visa RushCards.
In October 2015, we suspended our recommendation of these cards because of the widespread problems customers were having when using them (RushCard was in the process of transitioning to a new card-processing vendor). The Consumer Financial Protection Bureau, which ensures that financial service providers operate fairly, launched an investigation shortly afterward, which is ongoing.
The processor switch is complete, so dropping RushCard from all consideration is like saying that a car that once ran out of gas can and should never be restarted.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
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