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Rush Card woes show risks of prepaid cards

Posted at 12:51 PM, Oct 20, 2015
and last updated 2015-10-20 12:51:14-04

Remember the Kardashian Kard? It was gone in 60 seconds.

How about the Bieb's card? It's been better received.

But the grand daddy of prepaid celebrity cards is the Rush Card, founded by hip-hop mogul Russell Simmons.

It's had a good 10-year track record, until now.

Glitch Leads to Frozen Accounts

Chelsea Miller of Cincinnati's Walnut Hills neighborhood said "they were saying they were having scheduled maintenance last Monday, and that everything should be fixed by 8 a.m. Tuesday morning."

But it wasn't.
 
Miller -- like many other Rush Card holders -- were still having problems accessing their money more than a week later.

"My deposit was finally reflecting, but my card was not working at a store or ATM or anything," she said.

Cards Extremely Popular

Prepaid debit cards have soared in popularity, because they are convenient, don't require a credit check, and in many cases you can get a cash advance on your paycheck.

"That's why I signed up for the card originally, because they guaranteed a two day early pay period."

Card founder Russell Simmons has issued a personal apology.

  • He says the problems were due to an update, which led to a number of technical problems.
  • He says all frozen accounts are back online, or will be soon.

But Time Magazine says this highlights a possible downside with prepaid cards.

Time says these cards come with high fees, and says online banks have lower costs, and fewer problems.

It recommends looking at Ally Bank online.

Meantime, Consumer Reports Magazine recommends the American Express Bluebird prepaid card as the top prepaid card, with the lowest fees.

Chelsea says she's going to look at those other options. As long as you have a job, you should be able to get an online bank account.

Prepaid debit cards can be fine, but you may not want to put your entire financial life onto just one card.

That way you don't waste your money.

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