The truth about pre-paid cards vs. secured cards

The truth about pre-paid cards vs. secured cards

African-American owned OneUnited Bank launches UNITY Visa aimed at consumers in need of a financial comeback

By Suzan McDowell

Prepaid cards are all the rage because they provide the convenience of using a Visa card when making purchases. Then of course, there are all those sparkly celebrity endorsements that distract from the mechanics of using a prepaid card. From Justin Bieber to Magic Johnson, Lil Wayne and even the Kardashians, the rich and popular have cashed in by lending their names to the prepaid boom.

Prepaid card holders load money onto the card and that’s their credit limit. Kinda like a Starbucks card except it acts like a Visa and is accepted almost everywhere. Sounds simple enough until consumers get hit with one fee after another. Some of the more ridiculous include a fee for checking your balance, a fee for non-activity, a fee for a replacement card and on and on. One bank’s prepaid disclosure statement lists the word “fee” 127 times!  Some of these same cards make claims of being able to “build credit”. Even more serious, consumers can easily assume because these prepaid cards have a Visa logo, it must be reporting to the credit bureaus, thereby reward good repayment (and or reloading) behavior. This is FALSE. And in some cases, they’ve been accused predatory lending.

The truth is for those consumers unable to get a traditional credit card because of low credit scores, the best bet is to get a secured credit card, be-cause it puts your money to work for you.

Secured credit cards are real credit cards, so they report to the credit bureaus, all three in fact; Experian, TransUnion and Equifax. With millions of everyday Americans feeling the pinch of credit catastrophes like bankruptcy or foreclosure, secured credit cards are perfect for those looking to rebuild their credit.

In 2013, according to Gallup, 69 percent of Americans have an optimistic view of the future for their personal economic well-being. A new secured Visa card has just hit the market targeted directly at this demographic; economically optimistic, gainfully employed but credit score challenged. Nicknamed “The Comeback Card”, Unity Visa is backed by OneUnited Bank, the largest Black-owned bank in America. This new financial option is aimed squarely at those people who may have hit a bump in the road in the financial downturn but deserve a second chance to “comeback”. Because of the bank’s mission to “serve urban communities”, bank executives take the Unity Visa card very seriously, realizing the impact a “credit comeback” can make in Black and brown communities.

Good credit provides financial freedom in the sense it creates more options. OneUnited’s “Comeback Card” is accompanied with automatic registration in their How to Rebuild Credit Program, a virtual step-by-step guide of easy to follow steps to enhance what the Unity Visa is already accomplishing. Customers are contacted regularly via email with action steps and tips like “don’t max out your credit limit, even on your secured Visa because the ratio of balance to credit limit can affect your overall credit score.”

“We built UNITY Visa and our How to Rebuild Credit Program to fulfill multiple consumer needs. We wanted a program to support the financial comeback many are experiencing in America by helping to build and rebuild credit. We also wanted to provide a better alternative to costly prepaid debit cards. UNITY Visa accomplishes both,” said OneUnited Bank President and Chief Operating Officer Teri Williams.

But there is a cost incurred with a credit rebuild – UNITY Visa cardholders can expect to pay fixed annual percentage rates of 17.99% and a $39 annual fee as opposed to a monthly fee, which should be avoided with other secured Visas. The Unity Visa minimum credit limit is $250 and the maximum credit limit is $10,000, based on the cardholder’s ability to pay.

“Good credit is essential for buying a car or a home, leasing an apartment or getting a job – most employers run credit checks during the hiring process. We feel the UNITY Visa is a valuable tool for consumers that want to revamp their credit score in 2014,” Williams added.

This writer feels incredibly lucky to be a Unity Visa customer, having myself hit some “bumps in the road”.  In the last few years, being a small business owner has been brutal. But I’m still here and ready for my comeback.

To apply and learn more about how to rebuild your credit with the UNITY Visa, “The Comeback Card” visit www.unityvisa.com, call (877) 663-8648 or visit a location in Los Angeles, Boston or Miami.

Suzan McDowell is a blogger for the Huffington Post and the president of Circle of One Marketing in Miami.