My Prepaid Debit Card Has Been Discontinued. Now What?

There has been a huge move to prepaid debit cards, ever since the product was first introduced. A prepaid debit card allows you to electronically load it with a certain amount of money. Then you can use it to pay for transactions as you would a credit card, with each purchase debiting the card’s balance until it hits zero. At that point, unless you opt-in for overdraft protection, you cannot spend any more. It’s just like a credit limit.

Debit cards are often branded, just like credit cards. There’s always a bank of some kind involved, but debit cards may have some name attached to it. It might be a loyalty card or somehow have a celebrity’s name attached. Heck, you could even have your own branded card if you can find a bank to handle the transactions.

But what happens if your debit card is discontinued? What if your card has funds on it? Do those funds just vanish into the ether?

Don’t panic. The odds are very, very good that you won’t lose a thing. A lot depends on exactly why the card is being cancelled.

If it’s the brand …

Some branded debit cards simply aren’t sustainable. Yes, I said you could have your own branded debit card, but if nobody knows who you are, chances are you won’t have many users. The problem with niche brands is that they are, well, niche. The brand makes money from a variety of fees that are often charged for debit cards, which may or may not be split with the bank.

The brand itself may be of questionable value. The Kardashian Kard was criticized for charging several months of fees up front. This is not only poor business practice, as far as what consumers expect from a card, but how many people are really going to use the Kardashian Kard over the long term?

If the brand folds or somehow doesn’t meet its contractual requirements with the bank, the bank can opt to shut the card down. In that case, the bank is very likely to give you a drop-dead date by which you must use all the funds on your card. If you fail to do so, the bank would be foolish to not refund to you whatever is left on the card by sending you a check.

Failure to do so would make a lot of consumers angry, and possibly catch the attention of the FTC or CFPB.

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If it’s the bank …

You may be in real trouble, however, if the bank involved with the card discontinues it because it has suddenly become insolvent. That is, they basically have no money. If you happen to have a bank account, it’ll be insured by the FDIC. That isn’t usually the case with prepaid debit cards, however.

This is exceedingly rare now that we’re past the financial crisis, but it’s a good reason why you should stick to debit cards that are associated with large banking names.

In the event that this occurs, spend every dime on that card as quickly as possible. It may turn out that the funds will not be available.

One of the most famous cases involved Neteller, a prepaid debit card that was primarily used for online gambling. The federal government swooped in one day and shut Neteller down, and people had to wait six months to get their money back.

That’s another reason to be aware of branded cards, by the way. You don’t want to associate yourself with a dubious name. Always do your research on your brands!

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I Need to Improve My Credit Fast — What Should I Do?

Any reputable financial adviser will tell you that building your credit takes time. You need to demonstrate good credit habits over a long period to earn an excellent credit score. That said, there are a few shortcuts for those who need to improve their credit quickly — like in the next six months. If you need a quick credit boost, here’s what you should do.

The five credit score factors

In order to improve your credit score, you need to know what influences it. Your credit score is calculated based on these five factors:

• Payment history (35%)


• Credit utilization (30%)


• Length of credit history (15%)


• Types of credit in use (10%)


• New credit (10%)

All of this data is taken directly from your credit report.

I need to improve my credit as quickly as possible, what should I do?

The first thing you should do is pull your free annual credit reports at annualcreditreport.com. If this information is incorrect, your credit score will also be incorrect. Pull your credit reports and use this NerdWallet article on how to read your credit report to check for errors. If discrepancies exist, follow these five steps for disputing them.

After you’ve verified that your credit reports are error-free, move on to the five factors. Here’s how to increase your credit score — or avoid decreasing your score — for each factor:

Payment history. Make all of your payments on time. This is crucial to building and maintaining a good score. There’s a chance that your late payments won’t be reported immediately — but why take the chance? Furthermore, why incur the late payment fee? Always make your payments on time.

Credit utilization. Here’s where you can really improve your score fast. If your utilization ratio — or percentage of your debt balance to your credit limit — exceeds 30%, you need to pay it down as soon as possible. Use excess savings and discretionary income. Need more cash? Take these steps to make more and/or spend less.

Length of credit history. You can avoid hurting your score here by not applying for new credit accounts or closing old credit accounts. The length of credit history is the average length of your collective accounts, so you’ll want to avoid shortening it.

Types of credit in use. Not applying for new accounts is more important than having a good mix of credit accounts. However, there’s one thing you could do to keep an existing credit mix diversified. If you have credit card, car and student loan debt, pay down the credit card debt first. These revolving accounts will remain open while installment loans like car debt will likely close when you pay them off, effectively decreasing your credit account mix.

New credit. Don’t apply for anything new until you have to. Applying for new credit results in a new credit penalty to your credit score, which will decrease your score by several points.

Bottom line: Take the steps above to either increase your score quickly or keep it from decreasing. Also, understand that building excellent credit takes time, and this credit bump likely won’t put you exactly where you want to be. After your quick credit score improvement, continue to work on your score to get approved for the best credit terms in the future.

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What’s the Difference Between Prepaid Debit Cards and Secured Credit Cards?

Unless you happen to be very credit savvy, it’s entirely possible that you are unaware of two interesting credit options that don’t get much attention. The first is a secured credit card, and the second is a prepaid debit card. In both cases, the user very likely has no credit history or a poor credit history. They even operate in similar ways, although there is a huge difference between the two as far as building credit.

Secured card vs. prepaid debit: The basics

A secured credit card is a credit card, but with a unique function. Whereas most credit cards are unsecured — in that the issuer is relying on your promise and credit history to pay the card off in full at some point — a secured credit card has a backstop for the issuer. You actually put up a certain amount of money that the issuer will use in the event you default. They are covered against any losses. That amount of money serves as your credit limit.

A prepaid debit card allows you to electronically load it with a certain amount of money. Then you can use it to pay for transactions as you would a credit card, with each purchase debiting the card’s balance until it hits zero. At that point, unless you opt-in for overdraft protection, you cannot spend any more. It’s just like a credit limit.

Both are a great way to learn how to spend money responsibly. However, there are big differences that go beyond just simple usage. For starters, a prepaid debit card may have loads of fees attached to its usage. Those fees are not always disclosed clearly, so always check the fine print, or use Nerdwallet’s comparison tool. Visa, however, is beginning to issue a Best Practices protocol for disclosure. There are fees for secured credit cards, also, but the law requires clear disclosure of those fees.

What about building credit, scoring rewards?

The big difference is that using a secured credit card will build your credit while using a prepaid debit card will not. Credit bureaus look at how you spend money, and how you pay it back. It’s about credit – using the bank’s money to buy something with a promise to pay later.

A prepaid debit card is a cash-centered transactional device. You aren’t borrowing a bank’s money. You are using your money to load up a card, and then spend it down. Some people may get tricked into thinking it will help build credit, because most prepaid debit cards have a Visa or MasterCard logo. That logo simply indicates that one of those two companies is processing the flow of money from each transaction. That’s all it is.

One other difference involves rewards. A few prepaid debit cards offer very modest loyalty rewards. Credit cards, however, offer rewards for their use. Secured cards can also be somewhat limited in their reward offers. However, after awhile, you can graduate to a regular credit card that does offer rewards. There is no such graduation with prepaid debit cards.

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10 Items Under $10 You Should Always Use Your Credit Card to Pay For

Admit it: You sometimes feel silly paying for a small purchase with your credit card. After all, it just doesn’t seem sensible to use plastic for a $2 coffee or a $5 magazine.

But the truth is that there are 10 purchases under $10 that you should always use your credit card to pay for. Check out our list below for more details; if you can think of others, let us know in the comments below!

1. Your daily latte

There are lots of credit cards out there that give extra rewards points for dollars spent on dining out, and many people mistakenly believe that only sit-down establishments count. But usually, any purchase from a retailer coded as a restaurant will score you extra rewards – this normally includes coffee shops and fast-food joints in addition to fine dining. If you’re paying for your daily coffee in cash, you might be missing out!

2. Meals while you’re traveling for work

Grabbing a bagel or a sandwich while you’re on your way to an out-of-town business meeting might not seem like the right time to swipe. But if you plan to expense those meals, you should. Keeping track of receipts can be difficult, so just in case you lose one, having a credit card statement to fall back on is helpful.

3. Taxi fare

If you have a card that provides extra rewards on travel, there’s a good chance that taxis count as a travel purchase. Check your specific card’s terms and conditions, but again, don’t miss out on the opportunity to earn extra points or miles!

4. Chewing gum/candy

Chewing gum and candy are the ultimate impulse purchases. If you’re using cash, it’s easy to forget about them. But if you pay with credit, you’ll be confronted with your mindless spending every time you review your monthly statement. This is a good way to hold yourself accountable!

5. Home office supplies

If you work from home, make sure that the staplers and paperclips you’re purchasing for work are going on a credit card. Since these expenses may be tax deductible, you’ll want a record (in addition to the receipts) of your spending.

6. Your daily newspaper

“Newspaper” is really just a stand-in for any small purchase you regularly make. All of these spends should go on your card because the rewards you’ll earn on them will really add up over time.

7. Music downloads

Using a credit card for music downloads is preferable over using debit. If you accidentally purchase songs that you don’t want with a debit, the money will immediately disappear from your checking account and you’ll have to wait to get it back. With a credit card, no funds are deducted from your bank account and the process for getting a refund couldn’t be smoother.

8. Medical co-pays

A doctor’s office is a busy place, so sometimes there’s confusion about whether you’ve paid your co-pay or not. Putting it on a credit card will guarantee that you have proof of payment; this strategy has worked more than once for one of the Nerds!

9. Parking meter payments

If you have the option to pay with your credit card at a parking meter, you should. This way, you’ll have enough to pay for the amount of time you need without having to root around for change. There’s nothing worse than getting hit with a $50 parking ticket because you couldn’t find a spare quarter!

10. Recurring monthly subscriptions

If you’ve gotten hit with a charge for a recurring subscription you thought you canceled, going through your credit card company’s dispute channels might get it reversed. In fact, one issuer is even piloting a program to alert customers to these types of charges. This is just one more reason credit is the Nerds’ plastic of choice!

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I’m Single – Are There Any Credit Concerns I Should Be Aware Of?

Being single definitely has its benefits; after all, who really wants to argue about whose turn it is to take out the garbage?

But many singles worry about the financial implications of choosing not to partner off. Specifically, you might be wondering if there are any credit concerns you should be aware of. If so, take a look at the details below!

Marital status isn’t factored into your credit score

First, let’s review how your marital status is factored into your credit score. In short: It isn’t.

Your credit report (which is used to create your credit score) lists a lot of your identifying information. For example, your name, date of birth, Social Security number and current and past addresses are included. But other personal characteristics, such as your gender, religion and marital status aren’t. This means that these attributes don’t influence your credit score in any way.

All this is to say that being single has no direct effect on your credit score.

Single ladies – know your rights

It’s also worth pointing out that when you’re applying for a loan, your lender isn’t allowed to deny you credit because of your marital status. According to the Equal Credit Opportunity Act (ECOA) of 1974, banks can’t discriminate against borrowers because of their race, religion, age, marital status, gender or national origin.

This legislation was a major victory for the Women’s Right’s movement of the 1970s. Prior to the ECOA, single women were routinely denied credit even if they had the financial capacity to pay on it. This largely stemmed from sexist attitudes about women and money.

Luckily, we’ve come a long way since then – according to a Huffington Post report, in 2012 single women made of 18% of homeowners. This means that single women are accessing mortgages in numbers that probably wouldn’t have been possible before the ECOA.

Remember, you have only yourself to rely on

While it’s true that being single doesn’t affect your credit score or your ability to get a loan, it’s important to remember that bachelors and bachelorettes have only themselves to rely on when it comes to credit. This isn’t necessarily a bad thing, but it does add an extra layer of importance to taking your finances (particularly your credit score) seriously.

For instance, if one member of a married couple has poor credit, the other member might have a high enough score to qualify for a loan anyway. But singles don’t have this luxury, which means it’s essential to pay special attention to keeping your credit in solid shape.

Not sure what steps you should be taking to make sure your score is in good condition? Take a look at the Nerds’ top tips below:

• Pay your bills on time – no exceptions! This is the most important thing you can do to build and maintain good credit.


• Keep your credit card balances low. Specifically, don’t let your balance exceed 30% of your available credit on any card at any time.


• Establish credit as soon as you can. This is most easily accomplished by using a credit card consistently and responsibly.


• Only apply for credit you really need, and be sure to put a few months of space between hard inquiries.


• Review your credit reports at least once per year to make sure that the information is accurate.

The takeaway: Being single doesn’t have any direct impact on your credit, but it does mean that you should be extra vigilant about holding onto a good score. Don’t worry – with the Nerds in your corner, you have all the tools you need to make it happen!

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The Benefits of Memorizing Your Credit Card Number

If you thought your memorizing days were over when you finished your final exams in college, you thought wrong. As an adult, there are several numbers you should store in your brain — one of which may be your credit card number. Here are the benefits to memorizing your card number and a warning for our online shopping loving friends.

The benefits of memorizing your credit card number

You’ve memorized your phone number and Social Security number, but do you know the 15-16 digits emblazoned on your favorite credit card? Here’s why you may want to memorize them:

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  Reporting your card lost or stolen. When you call your card issuer, an electronic voice asks you for your card number before you’re transferred to a customer service representative. Since you won’t have your card in front of you, this will be made infinitely easier if you’ve memorized your card number. Otherwise, you’ll be stuck exasperatedly jabbing the “0” key trying to get an operator while the aforementioned electronic voice informs you that your card number hasn’t been input correctly.

  
  


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  Making a purchase on the fly. If you don’t have your card on hand, but want to make an online purchase, knowing your card number helps. You may also be able to load certain rewards gift cards — like your Starbucks card — on the go.

  
  


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  Ordering takeout during your commute. If you’re jonesing for Thai food and want it to be there shortly after you get home, you can recite your number without digging out your card on the road. Yellow curry and a safe drive? Win, win!

  
  

Online shopping addicts, beware!

Of course, there are drawbacks to memorizing your credit card number. Picture it: You’re on your way to work on a Monday morning. The bus is packed, so you’re holding onto the pole with one hand while skipping songs on Spotify with the other. Your iPhone chirps to alert you to an email. And look at that, J.Crew has a sale!

Without the memorization of your credit card number, you’d have to wait until you got into the office to buy that maxi dress and those cute metallic sandals. But since it’s stored in your brain, you can purchase them immediately, one-handed, without a second thought. Before you can say “buyer’s remorse,” you’ll have a shipping confirmation in your inbox and a balance on your credit card.

Online shopping fiends, especially those who receive sale emails, may want to avoid memorizing their credit card digits. No good can come from being able to spend to your heart’s content on the spot. In fact, you may want unsubscribe from those sale emails altogether — there will be another sale, I promise.

What exactly should I memorize?

Besides your actual credit card number, you should memorize your expiration date and CVV number. You’ll also need to know your billing address, which should be your current address if kept up to date. If these addresses differ, login to your online account and update your address right away.

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How to Avoid 5 Different Credit Card Fees

Getting hit with credit card fees is no fun, especially if you’ve been doing your best to avoid them. Talk about frustrating!

If this sounds familiar, take a look at the details below – the Nerds have some tips for shaking 5 common credit card fees.

1. Late fees

If late fees are a scourge you can’t seem to avoid, it’s time to get serious about setting up reminders to pay your bill by its due date. There are a few ways you can go about this:

• Sign up for text or email alerts with your credit card issuer; usually, you can arrange to have a message sent when your bill comes out and when it’s due.


• Set calendar alerts in your smartphone.


• Write your credit card bill’s due dates in your planner or paper calendar.

If you’re really forgetful, it might be wise to use all three of the strategies above.

Also remember that most credit card issuers will allow you to change your billing cycle so that your payment due date comes at a time of month that’s convenient for you. If the reason you’re paying late is because your billing date doesn’t coincide with your paycheck schedule, shifting things around might be a good option.

If all else fails, you could also switch to a card that doesn’t charge late fees.

2. Foreign transaction fees

If you frequently travel abroad or shop online at overseas retailers, you might be racking up big bucks in foreign transaction fees. If you’re not familiar with how foreign transaction fees work, it goes something like this: When you make a purchase with your card at a non-U.S. merchant, your credit card issuer charges a fee, usually 3% of the price of the item. That might not sound like much, but it can really add up over time.

Luckily, there are a lot of credit cards out there that don’t charge foreign transaction fees. Consequently, the easiest way to dodge this fee is to apply for a card that waives the fee and use it whenever you’re making a purchase from a retailer that’s not based in the United States.

3. Cash advance fees

If you’re regularly using your credit card to access cash, you’re likely getting hit with hefty cash advance fees. Most issuers charge 2%-5% of the advance in the form of fees, which certainly isn’t chump change if you’re in the bad habit of tapping your card for dough.

The best thing to do to avoid cash advance fees is to use your debit card when you need cash. Even if you use it at an out-of-network ATM, the fees are usually much lower than they would be with a cash advance from your credit card.

If you’re avoiding using debit because your checking account is running dry, it might be time to reevaluate how you’re managing your money. Taking a cash advance from your credit card should be a last resort in an extreme emergency; if you’re using them regularly, go back to your budget to figure out what’s going on.

4. Annual fees

Sometimes people sign on to a credit card that charges an annual fee without realizing they’ve done so. If you find yourself in this situation and are uncomfortable with the fee, you have a few options. You can try to get in touch with your issuer to see if they’ll convert you to another, annual-fee-free version of the card you have. This is a good idea if you’re generally happy with the card, but don’t want to pay a yearly charge to keep it open.

Another alternative is to close the card that’s charging the annual fee and open a new card that doesn’t. Be careful, though — this move could ding your credit score. If you decide to go this route, be sure to follow the proper steps for closing a card.

5. Overlimit fees

Overlimit fees are charged when you exceed your credit limit. According to the CARD Act, issuers aren’t permitted to automatically let you go over your limit and charge you this fee; you have to opt in to be allowed to exceed your credit line. If you’re getting hit with overlimit fees, it’s time to get in touch with your credit card company to see what’s going on. If you accidentally opted in, let them know that this was a mistake and take steps to have it corrected.

But also keep in mind that if you’re habitually maxing out your card you’re probably doing damage to your credit score. Try to keep from exceeding 30% of your available credit, if possible.

The bottom line: Credit card fees are a nuisance, so use the Nerds’ tips above to avoid them!

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