Russell Simmons has announced plans to slash several fees on his well-publicized RushCard in order to accommodate the rapidly growing demand for his product. But many say his decision to reduce fees on his prepaid debit card had more to do with increased competition after the introduction of Suze Orman’s prepaid product.
Russell Simmons Makes RushCard More Affordable
Hip-Hop mogul, Russell Simmons, launched the RushCard, a Visa prepaid debit card in 2003 with the “mission of empowering members by providing access to services that enable them to achieve their personal and financial goals,” according to the card’s website.
However, since its launch, the card has faced criticism due to hidden fees, even being investigated last year by the Florida Attorney General’s Office for charging more than its advertised $16 a year.
Now, Simmons says he plans to reduce several of the card’s fees due to its growing customer base. Not to mention, he says, that bigger profit markets have given him flexibility to cut fees and roll out new services.
Currently, it costs between $9.95 and $14.95 to buy the RushCard, depending on the card design. This excludes the money needed to load onto the card. Afterward, customers pay a $10 monthly fee, in addition to ATM withdrawal and purchase fees.
Starting next month, Simmons says he will cut his fees for bill pay enrollment, bill pay transactions and replacement cards. Then in March, he will offer cardholders an $7.95 monthly fee option, but will offer the option of lowering this fee to $5.95 if cardholders set up direct deposit.
Prepaid Debit Card Competition Pushes Fees Lower
In addition to having more flexibility, many believe that Russell Simmons’ decision to slash fees was sparked by Suze Orman’s Prepaid Debit Card joining the prepaid debit card market.
Orman launched her card earlier this month. While it has faced criticism, the card flaunts significantly lower costs than Simmons’ RushCard, including a $3 sign-up fee and $3 monthly fee.
In his announcement, Simmons noted that Orman’s entry into the market should fuel the growth of prepaid cards while simultaneously pushing fees down further.
Russell Simmons went on to say that consumers shouldn’t expect his fees to lower significantly. Instead, he wants to work on improving his services and features. “I don’t think my job is to be the cheapest,” he said. “I want to be the iPhone of this business.”
Everyone seems to be issuing prepaid cards these days, making all kinds of claims along the way, ranging from mildly untruthful to plainly absurd and Russell Simmons is certainly not the exception that proves the rule. But the latest controversy involving Suze Orman's prepaid card was a more instructive one, I guess because it attracted more interest. It confirmed my belief that the vast majority of Americans are very ill informed about this type of payment card, a fact which Orman unfortunately tried to exploit, even as she was denying it. The bottom line is that prepaid is the best card only if no other option is available to you. It does not help you improve your credit score, in fact it does not affect it in any way. The same is true for debit cards, which are, however, a much better, and cheaper, alternative for consumers who are not cut off of to the financial system, even if they have to pay a monthly fee for it. So get a credit card, if you can, use it within your means, so that you can pay it off in full at the end of each month, and you'll be better off in the long run. http://blog.unibulmerchantservices.com/prepaid-vs-debit-which-one-is-better
