Pre-paid debit cards offer less protection

March 28, 2014 (CHICAGO)

Pre-paid cards may have lower fees and cost less than a basic checking account, but in some cases, experts say they offer less protection for consumers.

One woman called the I-Team after $1,500 disappeared from her pre-paid card.

For some, it's a more convenient way to spend.

One recent study shows that consumers loaded $64 billion on to pre-paid cards in 2012. That number is expected to increase by 600 percent .

Pre-paid cards can also be linked to your paycheck for a speedy direct deposit.

An early direct deposit pitch from the pre-paid "RushCard" is what convinced west suburban Hanover Park resident Jennifer Coleman to ditch her checking account.

"I am a single mother now and I have five kids to raise, so I need my money," she said.

The patient care-tech noticed several fraudulent charges on her RushCard, adding up to about $1,500 at a California Target last week. This, after she used that same card at local Target.

"I checked my balance and I had a balance of 50 cents in my account," Coleman said.

It's unknown if this is related to that recent nationwide Target breech, but Coleman says RushCard would not immediately refund her money.

"And we have to go by procedure," she said. "I had to fill out a form and fax them my id it was a big hassle."

RushCard's policy says customers who have direct deposit like Coleman can get provisional credits but the investigation may take up to 10 days.

But other banks with traditional debit cards, like Chase, say they can give consumers a provisional credit within 1-2 business days of a potential fraudulent transaction.

So the I-Team e-mailed RushCard media spokesperson and they refunded Coleman within hours.

She also received a letter saying, "We apologize for any inconvenience this may have caused you."

"I notified you guys and magically within hours my money was in my account," Coleman said.

Coleman was issued a new pre-paid Rush card.

She may keep it for some purchases, but she has transferred her direct deposit to a new checking card.

If you get a pre-paid card make sure you know the policy about provisional credits during an investigation

It's important to mention, that experts also say in some cases pre-paid cards can protect you if you load them with small amounts, it's less money at risk.

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