Reloadable debit cards spotted at Target. I’m not sure this is a good thing…

Reloadable debit cards at Target

Over the weekend, a reader tweeted a photo of reloadable debit cards that he found at Target.

The cards shown include GreenDot Visa, GreenDot MasterCard, MyVanilla Visa, and NetSpend Visa.  All of these cards are reloadable at the register at many different stores (most stores require cash or debit, but you might be lucky enough to find one that accepts credit).  The GreenDot cards are also reloadable with GreenDot MoneyPaks, but GreenDot is phasing those out soon.  The other two are reloadable with Vanilla Reload cards, and NetSpend is also reloadable with their own NetSpend Reload Packs.

All of listed cards can be used as credit or debit cards, so there are many possibilities for getting money off of the cards if you need to.  NetSpend has the added bonus of a bill pay feature which lets you pay anyone, including friends.  The downside is that NetSpend is exceedingly trigger happy about shutting down accounts that are used in ways they don’t like.  Come to think of it, GreenDot and MyVanilla have been known to shut down accounts at the blink of an eye as well.

We don’t know yet if Target accepts credit cards to buy and/or reload these cards.  I certainly haven’t seen anything like these at stores close to me, so I haven’t had the chance to try.

Don’t buy these, unless…

If you’re a regular consumer who’s interested in prepaid products as alternatives to checking accounts, don’t buy these.  They are all burdened with fees that make them poor choices.  If you want a good checking account alternative, look to one of the Amex products: Bluebird, Serve, or the Target Prepaid REDcard (AKA REDbird).  These are almost completely fee free.  See: The complete guide to Bluebird, REDcard, Serve, and SoftServe.

The only good reason to buy the GreenDot, MyVanilla, or NetSpend products, that I can think of, is as vehicles for increasing credit or debit card spend to get rewards.  The process for doing so depends upon regional factors (e.g. which stores accept credit cards for what) and is outside of the scope of this post.

Why I’m nervous…

It’s well known that criminals find ways to exploit products like these.  While my readers happily use products like these to legally earn points, miles, and cash back, crooks find ways to launder money, scam overly trusting people, and cash out stolen credit cards.

Inevitably this behavior results in store policy changes: ID required, lower dollar amount limits, no more credit cards for payment, etc.

If Target rolls out these reloadable debit cards nationwide, I worry that it will just be a matter of time before Target is forced to lock down their currently liberal purchasing policies.  That would be very bad since it would likely lead to collateral damage…

Amex for Target, and more recently the Target Prepaid REDcard (AKA REDbird), have been fantastic options for increasing credit card spend, draining gift cards (including Amex gift cards), and more.  It seems likely to me that policy changes caused by the new reloadable debit cards will be applied across the board and will include our old and new Amex friends.  That would be very bad.

Hoping for the status quo

Usually I’m an optimistic guy, but in this case I’m not expecting the best.  My hope is that Target is simply testing out prepaid debit cards in a store or two and will decide not to go forward with them.  Even with that, I’m not hopeful.  Grocery stores and drug stores across the country carry these products, so they must be profitable.

There’s always the next thing

While I’m pessimistic of the future caused by Target taking on reloadable debit cards, I’m still optimistic overall.  Where one opportunity crashes, it is usually just a matter of time before new opportunities arise.  As we go forward, I expect that cycle to continue.

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