Chicago Bankruptcy Lawyer Blog

It used to be that kids wanted a cash allowance - today, they want a credit card of their own.

Credit card companies like Visa and MasterCard are increasingly marketing prepaid debit cards to teens and preteens. And they're convincing parents to buy the cards for their kids by pitching them as an easy way to teach children about finance. But these junior credit cards may be doing more harm than good, say Chicago bankruptcy attorneys.

Because prepaid debt cards can be loaded with a set amount of money, they show kids how to control their spending - at least, that's what credit card companies are trying to convince parents. In reality, the cards come with all kinds of fees - activation fees, maintenance fees, reloading fees, etc - that can leave kids with early debt and Mom and Dad footing the bill.

Continue reading "Credit Card Companies Targeting Kids With Prepaid Debit Cards" »

Kmart's latest blue light special might not be on clothing or toys, but on financial services.

With millions of Americans looking for checking account alternatives to avoid rising bank fees, retailers like Kmart, Wal-Mart and Best Buy are jumping on the banking bandwagon, according to The Washington Post. Kmart, for instance, is testing out prepaid cards, cash transfers and even cash checking services in its Illinois stores in hopes of luring customers who are either fed up with big banks or who never had a bank account in the first place. But as with any product, consumers are finding there are pros and cons.

Continue reading "Chicago Shoppers Turning To Big Box Stores For Financial Services" »

Imagine that you could set a spending limit for your credit card - when you reach the limit, it simply stops working. Sounds like a great way to stick to your budget, right?

Many consumers are doing just that with prepaid debit cards, the reloadable Visa, MasterCard, American Express, or Discover cards you can buy at the grocery store or drugstore, according to a story on MSNBC.com. Shoppers trying to save money like how the cards help control spending, can't harm their credit, require no minimum balance and come with no bank fees. Unfortunately, that doesn't mean they come without any fees - quite the contrary, say Chicago bankruptcy attorneys.

Continue reading "Are Prepaid Debit Cards a Budget Tool or a Bust for Chicago Consumers?" »

It turns out U.S. consumers are not only reducing debt, but we're also preventing it, say Chicago bankruptcy lawyers.

More than 20 percent fewer consumers used a credit card in the past month - that's 56 percent compared to 87 percent just three years ago, according to a recent study by Javelin Strategy and Research. It's the lowest percentage since Javelin started taking data, and they expect numbers to go even lower. It seems that folks are finally getting the picture that saving money is sometimes as simple as avoiding credit.

Continue reading "Chicago Consumers Reduce Credit Card Use During Recession" »

There are some places where debit cards are a better choice than credit. Those places aren't gas stations.

Thieves are increasingly stealing personal data with skimmer devices that they attach to gas pumps, according to Chicago bankruptcy lawyers. Since debit cards are linked to your bank account, criminals can record your PIN and then deduct money directly from your checking and savings accounts - adding insult to injury if you're one of millions of consumers already struggling to pay the bills and manage debt. And gas stations aren't the only places at risk - some scammers are starting to siphon personal information straight from ATMs.

So is there any safe way to use a debit card these days?

Continue reading "How Chicago Debit Card Users Can Avoid Scams at the Pump" »

If you can't beat 'em, join 'em - at least, that's what big banks are doing.

After their effort to stop the financial reform bill failed with the overhaul's passage Thursday, banks have no choice but to play along - but they're playing on their own terms, according to Chicago bankruptcy laywers. That's bad news for the many folks struggling with large debts.

For instance, new debit rules in the legislation decrease the interchange fee - the amount that retailers must pay to banks for debit card transactions. So while more retailers might start accepting debit - a benefit for consumers who want more payment options - banks plan to make us pay elsewhere.

Continue reading "Banks Are Back to Old Tricks and New Fees after Financial Reform Bill Passes" »

It looks like the financial reform bill will pass - though just barely. But what does it mean for you - and specifically, for that debt you're carrying around?

If all goes according to plan, the overhaul will do more than aim to avert another financial crisis, say Chicago bankruptcy attorneys. It will alter the way we use our credit and debit cards and qualify for a home loan. What it won't do, however, is automatically solve all our debt problems. That's still up to us.

Continue reading "Pros and Cons of Financial Overhaul Bill for Chicago Consumers" »

When gift cards surpassed traditional presents in popularity, I knew it was only a matter of time before we started just giving cash. And then, just as I predicted, the prepaid debit card arrived.

It's sort of the equivalent of cash, but more convenient than carrying around a wad of bills (and less awkward than gifting said wad of bills). Unlike a gift card, you don't have to guess whether the recipient likes a particular store. Heck, you don't even have to give prepaid debit cards as gifts - more and more folks are buying them for personal use.

As banks like to advertise, you don't even need a bank account or good credit to take advantage a prepaid debit card. Just load the card with your paycheck and spend. Convenient, huh? Unfortunately, it's a little too convenient.

Most of these prepaid cards come with ridiculous hidden fees - take the activation fee, for instance. I mean, why would you buy a card if you weren't going to use it? And that's not all, according to the New York Times.

Continue reading "Why Prepaid Debit Cards Might Not Be Such A Good Deal" »

Big banks don't like to be told what to. So with the news that federal regulators are considering legislation to control overdraft fees, a couple of the financial companies took matters into their own hands.

Bank of America and JPMorgan Chase recently announced that they would reduce the maximum number of overdraft fees - the outrageous penalties banks charge when you overdraw with your debit card - that a customer can incur in a day. Even better, they'll make it easier for customers to choose whether to opt in to the overdraft protection program. Currently, bank customers are automatically enrolled and aren't allowed out except in very special circumstances.

But how much of a difference will it really make? It depends.

Continue reading "Big Banks Revise Debit Card Fees, But Does It Help?" »

Since when does a cup of coffee cost $40? Since banks started using debit cards to make profits off their customers.

In the past few years, consumers have increasingly turned to debit cards and cash rather than credit. It makes sense - most Americans are carrying some sort of debt burden and we don't want to keep adding to it. We're tired of shelling out our hard-earned income to creditors; we want to take back control of our money. But banks aren't about to let us find financial freedom without a fight. They've begun capitalizing on this new trend with a little thing they call overdraft protection.

Let's say you use your debit card to buy a $4 drink at your favorite coffee shop. Now let's say you had put your paycheck in the bank a few days ago and, unbeknownst to you, it hasn't officially cleared yet. Your debit purchase will go through without any warning and you won't know that anything has happened. That is, until you look at your next bank statement and see that you paid $44 total for that caffeine fix, thanks to your bank's overdraft protection program.

Continue reading "Even Small Debit Cards and ATM Withdrawals Can Lead to Big Fees" »

When I first discovered the wonders of the debit card, I thought I was in heaven. Here was a form of payment as convenient as credit, yet seemingly as safe as cash.

Unlike paper money, it didn't require me to plan a trip to the ATM. But unlike credit, it didn't charge me interest or encourage me to spend beyond my means. I used it at the grocery store, the gas pump, the coffee shop - anytime I didn't have cash but didn't feel like adding to my debt. It seemed too good to be true. Turns out that it almost was.

One day I opened my bank statement and my jaw about dropped to the floor - what should have been a $5 charge for coffee and a muffin appeared as $35. Apparently, I had accidentally debited my snack before my paycheck cleared and my bank decided to make a pretty penny off my error. How did they do it? Through overdraft protection.

Continue reading "Debit Can Help Rein In Debt As Long As You Don't Overdraw" »