October 8, 2010
Lil Wayne’s Young Money to Debut Prepaid Credit Card
Young Money is all about the cash. Your cash. While it’s not unusual for artists to parlay their success into other ventures, this hip hop super group–led by Grammy-award-winning rapper Lil Wayne and breakout stars Drake and Nicki Minaj–plans to cash in on those struggling to build credit.Â According to reports, the group is releasing a pre-paid debit and credit card.Â Mack Maine, president of Young Money, told blogger Karen Civil, that “it’s just pretty much a Young Money card and then we’ll branch out to like Nicki Minaj pink cards, maybe having Wayne and Drake cards being like the black cards…Maybe have Twist and Chuckee for the younger crowd.â€
While this may be a lucrative deal for the popular Young Money crew, thisÂ could spell disasterÂ for your wallet if you’re not educated about how these cards workÂ . Details about the Young Money card are still being worked out, so I’ll refrain from conclusive statements about them and how they’re preying on the disadvantages of those in ourÂ communityÂ who financial institutions may consider “unbankable.”Â But I will dive into why prepaid cards, in general,Â can be hazardous to your financial health. The fees from many of these cards can add up to hundreds, if not thousands, of dollars over the years. (Ryan Mack, CEO of Optimum Capital Management, recently penned a telling blog opposing Russell Simmon’s Rush Card on Huffington Post to ilustrate this sameÂ point.)
So before you sign up with Young Money or any other prepaid cards, here’sÂ an example ofÂ fees associated with cards like these.
Rushcard vs. Typical Bank Card
Activation Fee: Rushcard = $19.95, Typical Bank Card = Free
Convenience Fee: Rushcard = $1.00, Typical Bank Card = Free
ATM Cash Withdrawal: Rushcard = $1.95, Typical Bank Card = Free (at Branch)
ATM Balance Inquiry: Rushcard = $.50, Typical Bank Card = Free
Bill Payment: Rushcard = $1.00, Typical Bank Card = Free
Inactivity: Rushcard = $2.95, Typical Bank Card = Free
Refund of Rushcard/Bank Card via Check: Rushcard = $5.00, Typical Bank Card=Free
PrepaidÂ cards are usually marketed towards those with no credit history, bad banking history or lacking access to financial institutions. Sure, Young Money and others may spin this as financial empowerment, but the truth is, many of the patrons who use these cardsÂ lack of financial understanding to begin with–andÂ unfortunately these individuals disproportionately tend to be in poorer neighborhoods. Prepaid cardsÂ do not help the “unbankableâ€ establish or rebuild credit; instead it creates a cycle hello-payday loans and check cashing spots.
Tell us what you think: Have you ever used a prepaid debit card? What message do you think Young Money’s prepaid card sends to young people? What are alternatives you would use for a prepaid card?