RushCard and Baby Phat Prepaid Debit Cards – Review and Fee Breakdown
Like any hip-hop mogul worth his salt, Russell Simmons has a wide array of businesses under his belt, from music to movies to clothing. But unlike any other hip-hop moguls that I know of, Simmons has also staked his claim on the world of finance with the RushCard, his own line of prepaid debit cards, some of which even feature Baby Phat co-branding.
While Simmons is known for his charitable work, it’s important to note that this card is not a charitable act to help the underprivileged and unbanked. It’s a business venture by which he profits off of those people who have few other choices. I don’t mean to imply that he relies on shady business practices, because he doesn’t. This card fits the mold for industry standard and isn’t any better or worse than most prepaid debits (check out these other prepaid debit cards for comparison). But before you apply for one, it’s important to understand what you’re getting yourself into and what your other options are.
Breakdown of fees
The point of a prepaid debit card is often to spare yourself the high interest charges you would face by overspending on a traditional credit card. A prepaid debit has a limited amount of money on it (like any other debit card), and it’s impossible to spend beyond that amount. However, the money you would save on interest could very well end up being spent on fees instead, since these types of card seem to charge you for just about everything. Here’s a breakdown of the most important fees for the two types of RushCards:
Monthly plan cards
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|One Time Fees|
|Usage||Use Your PIN: $1.00
Without PIN: FREE
|$1.00 capped at ten dollars ($10.00) per calendar month|
|ATM Balance Inquiry||$0.50||$0.50|
|ATM Withdrawal||Two (2) FREE each calendar month. $2.50 for each ATM withdrawal after first two (2)||$1.95|
Fee applied if no Card Transactions or loads have occurred for a period of ninety (90) consecutive days.
|Bill Pay Enrollment||$2.00||$2.00|
|Card-To-Card Transfer||Personal Card-to-Card: FREE
|Personal Card-to-Card: FREE
If you don’t want a credit card, consider a traditional debit card rather than the prepaid variety. Most banks, especially smaller local banks and credit unions, still offer free checking accounts. So if you can get a free checking account, your debit card will act exactly like a prepaid card, but without all of the extra fees. You should have to pay no monthly maintenance fees, no per-transaction fees, and no ATM fees. Russell tries to make the case that many users end up paying more for “free” checking accounts because their banks allow them to overdraft and then charge fees for using money that’s not in their accounts. But these days, they can’t do it unless you tell them to, so if you tell them not to, you’ll just be rejected when you try to overspend and you won’t be charged any fees.
If you can’t get a checking account or credit card because of bad credit, consider a secured credit card instead. These cards are specifically intended for people who have few other banking options. They function very similarly to prepaid debit cards, except that they do include credit lines, and your activity is reported to credit bureaus. The fee schedules are very similar, so you won’t save any money by switching from prepaid debit to a secured card, but you do get the benefit of building credit.