Thursday, October 20, 2011

Don't Rush into the card.

In the last few weeks I've been hearing a lot about people looking into The Rush card and I've found myself wondering why? After asking a few people and looking at the rush card (again) I'm even more confused.

The top three answers to why they considered the Rush card were:
* no fees or credit check
* need of a credit card for emergencies
* to build credit
Hmmm... The reasons for wanting a card are legitimate but you won't achieve any of these goals by using that card. Let's go through each, shall we.

No fees :
There are actually a ton of fees associated with this card, ones that you may not incur from a regular debit bank debit card. See below:

This pre-paid card seems have a whole lot of  fees associated it. Now I'm realistic, and you should be too and understand there will be fees because that's how the banking industry works. But what you should also see is that these fees are ridiculously excessive. At first glance if you have a rush card you will incur approximately $65/monthly in fees (including the so called optional services, like bill pay)...which is certainly NOT good deal to me. I use two accounts (big bank and small) and both allow me to pay my bills for free and make as many inquiries on my balance without penalty. In this day and age most companies allow you to pay bills from the web for free and even offer to waive other fees if you do so. 
 To be fair I decided to put in my criteria for a card, to see what recommendations they had and Guess what? The fees associated with these cards are STILL higher than what I would pay at a commercial bank.  
The Rush theory seems to be that they are better because you will never spend more than is available, therefore never incurring overdraft fees. And while this is a great lesson, it only teaches one aspect of  fiscal responsibility.

No credit check
That may be a selling point for some because we've all had our moments of carelessness with plastic, I know I certainly have (*looks at dumb ass Christian Dior bean bag*). But if a card doesn't check your credit, how exactly will they report back to bureaus about building a credit file. We'll get back to this. Strike one.

Needing a credit card for emergencies:
I know that my credit card has been a savior in many instance but I know that the key to being responsible was spending and paying back what I spent immediately.  BUT a rush card is not, I repeat NOT a credit card. It is a Pre-paid card, so if the emergency arrives and you don't have the cash to cover it, well then it seems to me you're kinda out of luck. There may be some people that actually have money on their Rush cards and only use it for emergencies only but it seems silly to me to have to constantly put money on a card when it could be gaining interest somewhere else.
My biggest fear for those using this card is that they will/are depositing their pay checks into this account, not using it as an emergency funds.  Therefore not using it for an emergency but for everything. The site promotes this in several places, depositing your entire  paycheck, tax return etc and it's a bad idea. Strike two.

Building Credit: This Pre-paid card doesn't report back to the credit bureaus. I searched the site for some time and couldn't find that anywhere. With that said, having that card seems like you're shooting yourself in the foot. Credit essentially is a loan that you need to pay back. The company that originates the loan will then reports back to the bureaus on how responsible or irresponsible you are with their money. Responsible = good credit score, limits raised, Irresponsible = low score and fees and more fees, bad reports sent to the credit bureau killing your future forever more (not really but you get the drift). Strike three.

So what are my suggestions as I sit here giving the side eye to y'alls Uncle Rush and his savior card? Easy don't get this stupid card.

Deposit your pay checks into a bank or credit union. Even with the terrorist movements by big banks lately, there are still tons of options. Do the research and make that change. The comparison on the Rush site (see below) should not scare you into believing that there are no banks out there that can't beat these made up fees. 

A friend recommended USAA, and after looking into them I think they are a pretty good option. They offer a few perks but if you're uncomfortable with not being able to physically visit their banks then those of us in NY might want to keep looking. (According to their site they have easy deposit locations so that will help with needing to deposit checks).  But again you're banking needs can only be met if you do the research.

For those of you out there who still feel like they need plastic, and your bank is not completely power tripping * side eye Bank of America* see what secured cards they offer,. There are a handful of banks that will allow you to decide what your balance is (usually from $300 up). This option is actually closer to a credit card and will help you build a steady credit profile. After one year some banks review your credit worthiness and will offer you an actual credit card and return your initial deposit.

There are people that exist without any credit at all and that's fantastic(well until you go to get a mortgage or something) but there are a whole lot more people that dig themselves a grave of bad credit due to bad decisions. The Rush card is just that a bad decision.

Another good read about The Rush CardSunday Brunch Thanks FunkDigitial!

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