The prepaid card business is booming now that banks are ratcheting up the fees on checking accounts to all-time highs. Should you get a prepaid Discover card instead? Consider these 3 things…

1. Acceptance of Discover

When it comes to Discover credit cards, I know the #1 hesitation people have in applying is that they worry it won’t be accepted in many places. But nowadays, nothing could be further from the truth.

Did you know that Discover cards are accepted at over 90% of places that take Visa/MasterCard? So if you live in the US, over 90% of merchants that allow credit card payments will accept Discover.

For ATM transactions (like getting cash) there are over 675,000 locations:

PULSE is one of the largest ATM networks, so you shouldn’t have any problem finding one where you can use a Discover prepaid debit card. For example, I searched on their site and found 41 locations for a rural zip code in Michigan. When I searched Los Angeles, I got 1,468 results.

Conclusion? Acceptance at over 90% of retailers + tons of ATMs = plenty of places!

2. Features/Benefits

The benefits can vary by card, but here are the basics you can expect:

• fraud protection for unauthorized charges
• cash access through ATMs or at stores that will do cash back
• account monitoring through Discover’s website or the issuer’s website
• reload options

Conclusion? Pretty basic. These are on par with what Visa and MasterCard offers. The best benefits are on the prepaid card from American Express because it gives you free protection against eligible items that are stolen or accidentally damaged during the first 90 days from date of purchase.

3. Pricing/fees

As we all know, prepaid cards are notorious for charging outrageous fees. Will you get that with Discover?

The answer isn’t black and white.

You see most Discover prepaid cards are actually issued by another bank… and that bank is the one who decides the fees. To give you an idea of what’s out there, here are a couple:

Young Money Prepaid Card – Launched back in 2011, this is branded by Lil’ Wayne and issued by MetaBank. Review the fees for yourself:

So basically you’re paying a one-time fee of $6.95 to get the card, then an on-going monthly fee of $3.95. The reload fee can be avoided if you do direct deposit instead to load your funds.

It’s not the worst prepaid card on the market, but it’s not the best either. The biggest drawback is that you don’t get any free ATM withdrawals (they’ll always cost $2 a pop).

nFinanSe – Issued by First California Bank, I’ve heard of employers using this for payroll. A couple years ago there was someone on the forum complaining about them. Here are the fees:

It looks like you would be paying a lower amount than the Young Money card, but it’s still not exactly what I would call a bargain.

Worth getting or not?

So should you apply for a prepaid Discover card? Well they’re somewhat better than the average prepaid card. However even with that said, personally my vote would be a “no” and I say this for a few reasons:

1. If you’re going to get a prepaid card, then the one from American Express is probably the best deal. It has the most benefits and in my opinion, the most reasonable fee structure.
2. Prepaid cards don’t build credit. If you don’t mind that, then go ahead and get one. But if you want to build credit, I recommend checking out Orchard Bank secured cards. No matter how bad your credit history may be, you still might have a chance with them.
3. Keep in mind that due to the Patriot Law, your Social Security number is a requirement for all prepaid cards. So if you’re going to go through all that hassle of verifying your identity, then why not just go for a secured card instead?

Most student cards on the market are a rotten deal. I’m not denying the fact that the 18-24 age range is a riskier group for the banks – but still – that’s not an excuse for the excessive APRs and crappy benefits!

I had a BofA credit card at age 19. It wasn’t a student card but might as well have been, because it was a very basic account with almost no benefits.

Here’s a review of the current Bank of America student credit card. It has some advantages but also major disadvantages you need to know about.

Advantages?

Reasonable Interest Rate – Without a doubt this is the best thing it has going for it. Most cards in this category have APRs as high as 20% or more. However as of May 2012, BofA gives everyone the same rate:

It would still be stupid to carry a balance at that rate, but at least it’s somewhat reasonable (in comparison). Also there’s no penalty rate… in other words if you make a late payment, you don’t have to worry about them using that as an excuse to raise your interest rate.

No Annual Fee – Not really surprising though, as most student cards don’t charge a fee.

Account Management Features – Aside from the obvious things you would expect, there are a few unique features: the ability to text and get account information in seconds, as well as optional email/text alerts for balances and payment due dates.

Student Identity Theft Protection – The account offers this for 4 years with no charge. But what is it exactly? I had to dig in the application’s fine print to find out:

• Enrollment/activation is necessary to get the benefits (but there’s no charge to do that).
• Each business day your credit file is reviewed for signs of identity theft/fraudulent activity. Whenever “certain changes occur” they will notify you (but they don’t disclose what specific changes trigger that).
• If you’re a victim you can call and get advice, but you will be the one responsible for actually resolving the issues (such as contacting the credit bureaus, filing disputes, etc).

Other Benefits (Fluff) – When I looked at the BofA student card application there were several other benefits listed but they were basically just fluff. Don’t be fooled that it’s a “Platinum Plus” Visa as that doesn’t really mean anything nowadays (in fact, it’s the same level my BofA Visa also started out at when I was 19).

Examples of fluff? They listed 4 different benefits related to fraud liability and protection but at the end of the day those aren’t anything special because by federal law, you’re protected against fraud on all credit cards. If there are unauthorized purchases made, the most you can be held liable for is (a) a max of $50 if someone used your physical card to make the purchases, or (b) $0 liability if only your account number was used while the card was still in your possession. That goes for all credit cards, not just this one.

Disadvantages?

No rewards program – This is a major letdown and one of my biggest complaints about student credit cards… so many of ‘em don’t give you rewards!

Why not? I guess they think you don’t deserve them. Well, I say that’s BS! Whether you are 18 or 80, everyone should be getting something back. Credit card companies make 1-2% on your purchases (paid by the stores/merchants) so it’s only fair that they chuck back some of that to you, right?

If you want cash back or points, compare these student credit cards with rewards.

Few Useful Benefits – Aside from rewards, one of the main reasons (in my opinion) to have a credit card is so you can take advantage of the benefits it offers. With many other student cards, on qualifying purchases you can get a free extended warranty and 90 day protection against theft/accidental damage. Unfortunately you won’t get any of those with this bare-boned Bank of America Student Visa.

Contrast that to one of my favorite no annual fee offers, the Citi Forward card for college students. Yes, I do choose to advertise it and after you see all the benefits that come with it, you will understand why!

BofA Customer Support – Now in their defense, I have noticed their credit card customer support has improved lately. But still, it doesn’t exactly have the best reputation (to put it nicely). Probably the best student card for this category is from Discover. Did you know that all of Discover’s customer service reps are in the US? A rarity for a credit card, that’s for sure!

Verdict?

Overall, the Bank of America student card is an alright choice for building a credit history and score. But aside from the ID theft protection, the lack or rewards and useful benefits means all you are getting is plain vanilla credit card.

Be warned that even though the APR is below-average, it still doesn’t make any sense to carry a balance on. Simply put, all student credit cards (including this one) will have APRs higher than any student loan will charge. So if you need money for tuition and expenses, do NOT use a credit card as your source!

And on that note, If you think you will be prone to getting in trouble by using credit, then it will probably be best for you to avoid it altogether (at least for now). Here are some alternatives to using the Bank of America student credit card:

American Express Prepaid – You can only spend what you load onto the card, meaning zero debt! Getting the card is free.
Secured Credit Cards –With these types of cards your credit limit is back by your security deposit. Annual fees tend to be around $30-50 per year.

With the insanely high prices at the pump, I’ve been asked by more than one person what are the best credit cards for gas only (in other words, not major credit cards that can be used everywhere).

The answer? Most downright suck!

Reason #1: Rewards are pathetic or non-existent

Rewind back a decade ago and gas station cards used to be among the best for fuel rebates. Some would offer 2-10 cents off per gallon… and back when gas was only two bucks a gallon, that was a significant savings, percentage-wise.

Now most don’t even have a rewards program! They’ve either totally eliminated them (so you’re earning no rebate at all) or what they give you is pathetic. Take the Valero gas card as an example. After the first 3 months (the signup promotion) in order to earn gas rewards, you have to pay a $10 annual fee to get the Gold version – and even then – the rebate is miniscule:

Think about it… if you were just using a normal Visa/MasterCard with 1% cash back, on $4 gas you would have earned 4 cents per gallon. Look how that compares to this station’s gas-only card program!

On the other hand, the top-rated gas cards will give up to 5% at all stations. Isn’t the choice a no-brainer?

Reason #2: You’re confined to one brand of gas

The biggest drawback of a gas only credit card is that it will only work with the associated station. You won’t be able to use it elsewhere.

Now if the card actually gave good rewards (like 3% to 5% rebates) then that might be okay, because the benefits would outweigh the drawbacks. But if you’re not getting rewards – or only low rewards – why do you want to be confined to one station? Then you will be at the mercy of their price, regardless of whether or not they are the cheapest station that day.

Reason #3: Limited use for building credit

If you have bad credit, then getting approved for a major credit card can prove to be a difficult task. In that scenario, getting gas cards for gas only does makes sense… since they are easier to get approved for, you can use them as a stepping stone to establish or re-build your credit.

But be careful, because if the only thing on your credit report are store and gas cards, then you’re going to have a hard time convincing grade “A” issuers like Chase, Citi, AmEx and others to approve you for a good card.

So while it’s true that a gas-only account can be useful for building credit, you’re still going to want Visa or MasterCard credit cards to rebuild credit, too.

Reason #4: Outrageous APRs

Take a look at the APR on a gas station card application and don’t be surprised if it’s in the 22-27% range. For example, the Shell “Drive For Five” application listed this:

A pretty outrageous interest rate, especially considering how few benefits you get with the card.

Reason #5: Tricks, not treats

Make no mistake about it… all credit cards (including the more respected ones) will no doubt have people complaining about them. However out of all the card types, those from gas stations are among the most complained about on CreditCardForum.

Why? Well aside from usually having subpar customer service, many people are just fed up with the tricks that are all too common with them.

For example, with the Shell “Drive For 5” gas only card, you do have the ability to earn 5 cents per gallon (note: that’s 5 cents, not percent). But take a look at the fine print:

So if you don’t buy more than 45 gallons per month, you won’t get it. And even if you do meet that threshold, a 5 cent rebate when gas is $4.00 only equals 1.25%. Hardly a reason to jump for joy.

Conclusion?

Generally speaking, the cards that you can only use at gas stations are for suckers. Unless your credit is shot, there’s no reason to apply for these inferior offers.

Written or last updated May 2012

Q: Every credit card I’ve had has either been a Visa or MasterCard. I’ve seen those commercials for 5% cash back from Discover but I have no experience using them. Is Discover card good to have or not?

A: In my personal opinion, yes. I’ve had an account with them for 4 years now and am quite satisfied. But on the flip side of the argument, the word “good” is subjective and as with any credit card, it’s impossible to make everyone happy. I’ll present you with the facts so you can draw your own conclusion.

Part One: The Customer Service

One of the things that really impresses me about Discover is their customer service. Unlike most banks, they are based in the US and when you call, they actually tell you where they’re located. From my experience it’s usually their Utah or New York call center (and yes, they’re actually telling the truth).

Because I’m so busy with work during the day, typically my customer service calls (for everything) tend to be at night, like 10 or 11 pm Pacific. Calling at that time is really the ultimate test for a company, because most will hire zombies for the graveyard shift. However whenever I’ve called Discover, my experience is the opposite: good service reps no matter what time I call.

But don’t take my word for it… recently J.D. Power & Associates ranked AmEx and Discover as the 2 top-rated credit card companies for “customer interaction.”

Part Two: The Rewards

Is Discover credit card good for rewards? Yes, as long as you understand how they work.

In fact their More card actually offers the best deal for certain categories of spending. The reason for this is your 5% cash back is worth even more when redeemed for partner gift cards. Read this Discover More review to learn more.

On the downside, for non-category spending (purchases which are not part of the 5%) there is a tiered system in place: 0.0025% (1/4%) cash back on the first $3k in annual spending, 1% after that. So that means you’re earning $22.50 less on that first $3k, then you would if you were earning a flat 1%.

For these reasons, I primarily use the card for the bonus categories and online purchases thru ShopDiscover (which also offers bonus cash back). For other spending, there are different cards I prefer to use.

Here are the reward details for their other cards:

• Open Road Card (no annual fee, 2% on gas + grocery)
• Escape Card (2% rewards value on everything, $60 annual fee)
• Miles Card (no annual fee, at least 1% rewards value)

Part Three: The Benefits

On the no annual fee cards (More, Open Road, Miles, Motiva) the benefits are middle of the road and comparable to what you will find on most other credit cards:

• Travel Assistance – You can call 1-800-DISCOVER for help with things like passport and travel document replacement, emergency medical referral (helpful if you’re in a foreign country), emergency cash access, and help replacing lost/stolen tickets. Keep in mind Discover doesn’t pay for these services, they just help arrange/advise.
• Insurance Benefits – There’s car rental collision damage insurance (secondary coverage) and flight accident insurance for airline tickets. To qualify you need to pay for the rental or airline ticket with your Discover card and follow the rules.
• Account Management Tools – Calling these special would be a stretch, but Discover probably does have the best online account interface. Very easy to use and tons of budgeting tools for analyzing your spending.
• Cash Over Benefit – Now this is a unique perk… you can get cash back at the register when you use your card at participating retailers. Similar to how you can get cash back when paying with a debit card. There is no other major card out there that offers this.

On their premium card, the Escape, you get a number of extra benefits. The third one is fairly common but not the top two:

• Rental coverage is primary, not secondary
• Trip delay/cancellation insurance for eligible circumstances
• Damaged/lost luggage insurance

Part Four: Card Acceptance

Contrary to popular belief, Discover now actually has good acceptance – over 90% of merchants in the US who accept Visa/MasterCard also take Discover.

On the other hand, their international acceptance could use some improvement. But the no foreign transaction fees is a nice perk.

Part Five: Approval Requirements

A drawback with Discover is that you need to have a really good credit score in order to qualify. Although they don’t publicly disclose the minimum, it seems to be that you need at least a 710 to 720 FICO to get approved for their More card. Their Motiva card seems to be easier to get, but still requires good credit.

Let’s be honest… in the business world, portraying the right image means everything.

Think about it… what goes thru your client’s mind if you whip out a sub-prime card for bad credit to pay for a dinner?

The client is probably thinking “How can I trust him with my money, when he obviously can’t even manage his own!”

Obviously, you won’t have to worry about that problem when paying with the American Express Platinum Business card. No other card shouts success like this card.

*Note: If you’re looking for the personal (non-business) version then go here.

But is it just a status symbol?

The truth of the matter is that this card is far more than a status symbol. If you actually use the benefits, it’s an excellent investment which can easily save you thousands of dollars per year. But is it right for you? Review these 10 benefits (and drawbacks) and decide for yourself.

1. It’s a charge card, not a credit card

First of all, it’s important to realize that this an American Express charge card (not a credit card). That means you have to pay your bill in full each month. So this is the wrong choice if you need long-term financing.

If you’re looking for a business credit card that lets you carry a balance, then I would recommend the Chase Ink Cash.

2. Get free access at 600+ airport lounges

If you do a decent amount of traveling, then you will especially enjoy this benefit. Only the AmEx Business Platinum offers you access at all of the following:

• Free Priority Pass Select membership – With this you get access to all of their lounges, both domestic and int’l. Access for you is always free. If you wish to bring guests, they are $27 per person for each visit. You can’t buy the “Select” Membership directly thru Priority Pass, but look how much it would cost to buy their most similar plan:
  

Plus on top of that, you also get free access to the first-class lounges for the following airlines:

• Delta Sky Club
• American Airlines Admirals Club
• US Airways Club

Just a Delta Sky Club membership alone would cost you $450 per year! So as you can see, between the Priority Pass Select and the airline lounges, the value you’re getting from airport lounge access is literally worth up to $1,000+ per year.

3. Get $450+ in perks with each hotel stay

Without a doubt, one of the most popular benefits on the business Platinum card is the Fine Hotels & Resorts program. There are over 700 hotels worldwide that participate and when you stay with them, you will get the following:

• Room upgrade upon arrival, when available
• Noon early check-in, upon availability
• Daily continental breakfast for two
• 4:00 pm guaranteed late check-out
• Additional hotel-specific benefits, such as a $100 dining credit or free 3rd night (the benefit will vary by property)

So if you’re a business traveler who stays at more of the higher-end hotels like Hyatt, Mandarin Oriental, the Ritz, etc. this benefit alone is reason enough to apply. However if you’re more of the Motel 6 type of guy, the drawback is that this benefit won’t be of any use to you.

4. Up to $200 in airline fees refunded every year

Not too long ago American Express added a new benefit to their Business Platinum Card and that is the ability to get up to $200 in airline incidental fees refunded every year; checked baggage fees, in-flight meals, ticket change fees, in-flight entertainment charges, etc.

The only drawback is that you have to pick one airline for this. For example if you choose United, then you will only get these fees refunded when flying with United. But don’t worry, you have the option each year to change your preferred airline.

5. Membership Rewards

Only the American Express Business Platinum & Centurion cards participate in the Membership Rewards First (which is much more valuable than regular Membership Rewards on the Green and Gold). Here’s what you get:

• 1x point per dollar spent on purchases
• 2x points per dollar spent with AmEx Travel
• Up to 10x points per dollar at over 300 websites thru Membership Rewards
• There’s no limit to how many points you can earn and they never expire
• Don’t have enough points for the reward you want? You can get up to 60,000 points advanced to your account.
• Want travel rewards? Only Membership Rewards lets you convert your points to frequent flyer miles and hotel rewards, usually on a 1:1 basis, with 15+ airlines and hotel programs participating.
• You can also score up to 25,000 pts using this link.

6. Concierge service

I know there are a number of credit cards nowadays that come with concierge service (i.e. Visa Signature and World MasterCard) and what they offer is good considering that you can get it on a no annual fee card like the Sapphire from Chase.

However the 24/7 concierge we’re talking about here is of a whole other caliber. It’s the cream of the crop from American Express and they will really jump thru hoops for you.

7. Up to $200 in free roadside assistance

Don’t have an AAA membership? No worries, because with card you get free roadside assistance; up to $50 per call and you can use it up to 4x per year (so up to a $200 value).

8. Reimbursement for $100 Global Entry fee

If you’re not familiar with Global Entry, it’s a program administered thru the U.S. government which allows approved low-risk travelers expedited clearance when going thru US customs at most major airports.

If approved, you have the ability to skip the lines and use an automated kiosk to check yourself in when you’re returning to the US.

To apply for this, you have to cough up $100. However if you pay with your Platinum Business Card from Amex, you will receive a statement credit to offset the cost.

9. A large number of insurance benefits

You probably won’t be surprised to hear about the many insurance benefits which are included with your card membership on eligible purchases:

• Purchase Protection – Covers accidental damage, theft or loss on qualifying new purchases for 90 days. Up to $10,000 per incident with a max of $50,000 per year.
• Extended Warranty – Receive up to 1 additional year in coverage on qualifying purchases which come with a US manufacturer’s warranty. For example if it comes with 1 year of coverage, you get an extra 1 year (2 years total) thru American Express. Up to $10,000 per item, not to exceed $50,000 per year.
• Car Rental Loss & Damage Insurance – Please note that on AmEx Business cards you don’t get this benefit when renting outside the US.
• Baggage Insurance Plan – Offers extra coverage during qualifying Common Carrier travel which is purchased with your card.
• Travel Accident Insurance – During qualifying Common Carrier travel.

There are others too, check out the application to see them.

10. Companion airfare on international flights

If you travel internationally, then even if you just use this feature once, you could easily save a thousand dollars or more with it.

• Purchase an eligible business or first-class ticket on an international flight to get the companion ticket offer
• Available on international flights with 23 airline partners
• The companion airfare is free but you will have to pay any applicable taxes, fees, and airline fuel surcharges on this 2nd ticket.

Who should apply?

At $450 per year, it’s definitely not for everyone. But as you see, even if you only use a fraction of the benefits, the membership fee can easily pay for itself many times over. So if you see yourself using these benefits, the choice is obvious – go for it. This is especially true for avid travelers.

Best Offer: Apply now and earn up to 25,000 bonus points

For those who won’t be using the benefits, then it will probably make sense to consider a different business credit card. The same holds true if you anticipate the need to carry a balance. For good alternatives you can compare business card offers here.