The Nitty Gritty on the Rush Card
In a recent Generation Debt article, Anya Kamentz discusses Russell Simmons expansion to the financial services industry through the Rush Card, the Visa-logo prepaid debit card. As you may know, Russell Simmons is a cofounder of Def Jam Records. Simmons definetly knows a thing or two about money, he sold Def Jam in 1999 for a whopping $100 million bucks, and built Phat Farm an urban-focused clothing company. Most recently, he began marketing the card as a solution to people who don't have a credit card. He rightfully notes that renting a car, booking a hotel or buying a plane ticket can be greatly inconvenienced by not having a credit card. So, viola the Rush Card appears to fill the gap. At face value, a prepaid debit card seems to be a pretty good to low-income Joes, many of whom are people of color. For no credit check, no security deposit, you can get a Visa card that you can fund with direct deposit, bank transfers, money grams, even a tax refund--but anyone who uses it gets a raw deal.
First, there are activation fees of up to $19.95, per transaction fees of up to $10 per month, telephone balance inquiry fees, overdraft fees, ATM withdrawal fees, and worst of all, inactivity fees. (To see the entire list click here, then go to "Schedule of Fees".) Whew! Second, by funding the card before you need it, cardholders don't earn any interest--to the contrary you get charged for not using the card, further chipping away at any money you have. Third, debit cards don't appear on your credit report, meaning even if you use them well, you won't get a boost to your credit report. I called the general customer service number last night to confirm. After being on hold for 15 minutes, a customer service rep confirmed that the "card has nothing to do with your credit, since it's prepaid."
As Kamentz notes, the average prepaid Visa card costs about the same as a check cashing place, an annual average of $320 per year; Russell Simmons' card is about $180 per year. She also notes that an even better bet might be one of the many banks offering no minimum checking accounts, as they run an average of $36/year assuming no overdrafts.
All things considered, even though the Rush Card claims to offer "financial power and freedom" in reality, it looks like its low-income customers get the short end of the stick, once again if Russell Simmons really wanted to improve financial power and freedom for low-income people, perhaps he might consider offering a secured credit card, attached to an interest-bearing savings account to actually improve credit scores instead of just lining his own pockets and, in the long run, not doing much for his clientele.
First, there are activation fees of up to $19.95, per transaction fees of up to $10 per month, telephone balance inquiry fees, overdraft fees, ATM withdrawal fees, and worst of all, inactivity fees. (To see the entire list click here, then go to "Schedule of Fees".) Whew! Second, by funding the card before you need it, cardholders don't earn any interest--to the contrary you get charged for not using the card, further chipping away at any money you have. Third, debit cards don't appear on your credit report, meaning even if you use them well, you won't get a boost to your credit report. I called the general customer service number last night to confirm. After being on hold for 15 minutes, a customer service rep confirmed that the "card has nothing to do with your credit, since it's prepaid."
As Kamentz notes, the average prepaid Visa card costs about the same as a check cashing place, an annual average of $320 per year; Russell Simmons' card is about $180 per year. She also notes that an even better bet might be one of the many banks offering no minimum checking accounts, as they run an average of $36/year assuming no overdrafts.
All things considered, even though the Rush Card claims to offer "financial power and freedom" in reality, it looks like its low-income customers get the short end of the stick, once again if Russell Simmons really wanted to improve financial power and freedom for low-income people, perhaps he might consider offering a secured credit card, attached to an interest-bearing savings account to actually improve credit scores instead of just lining his own pockets and, in the long run, not doing much for his clientele.
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