| By: Shawn Christopher
Investment Director for the Page Murphy Investment Group
There has been much talk about Russell Simmons and recent troubles with RushCard, a company he had founded in 2003.
The company came under trouble after a recent technical issue prevented tens-of-thousands of RushCard users from accessing their accounts.
The company CEO Rick Savard said in a statement the company had changed from “an old transaction processor to a new one” which was the cause of the technical outage. The switch prevented many RushCard users from accessing funds or their information for over 16 days. This is perhaps a major blow to the reputation of the company.
Although the CEO and Russell Simmons himself, apologized for the outage, is it as bad as it seems?
Most financial institutions are not required to tell their clients and customers when a change in technology or so forth is going to occur, especially if it is communicated to the institution that their upgrades will not impact their customer.
Plenty of banks update their software all the time and have outages where banking cannot be done during certain times of the day, but the upgrades and downtime more often occur at night.
Most customers are required to sign an agreement before opening an account. Depending on what they signed for, the agreement may state confidentiality between third-party organizations. The onus may be much greater in Simmons’ case, considering he is often seen as a leader in the community and someone people put trust in.
It boils down to a question of ethics and necessity. On the one hand, there’s no way RushCard knew the serious impact transferring vendors would have on its business or customers.
And it’s also doubtful someone as conscious as Russell Simmons would knowingly steal anything, let alone someone’s hard-earned money.
Now there’s a class-action lawsuit, but the chances of it being successful are very low.
There would likely have to be proof the intent behind the outage was malicious or that funds were indeed stolen – neither of which happened
Therefore, the lawsuit may not garner any traction. It is not impossible, though. The greatest loss here is RushCard’s reputation.
As famous businessman Warren Buffett often quips “it takes ten years to build a reputation and 5 minutes to destroy one,” which could easily summarize the future of the RushCard after this fiasco.
For unhappy campers, there are alternatives to the RushCard. Being that the RushCard is a prepaid credit/debit card, it does not build a person’s credit profile. However, it does help people to develop the financial discipline of being responsible for paying bills consistently, without having to pay huge interest rates which in turn, eventually does help one’s credit.
There are many choices. In fact, your local bank can give you a low-interest credit card. Some even have credit cards that don’t charge any interest for the first 12-18 months. Each bank is different but for the purpose of this article,
I’ve provided a list of some great credit cards for young students or anybody who has bad credit or issues getting a regular credit card from traditional banks.
Credit One Unsecured Visa Card
This card boasts a variable interest rate from 17.9% to 23.9% that is typically lower than the 19-21% on regular credit cards. It has an annual fee of $35 to $99 and 1% cash back on certain purchases. You can pick a payment date to fit your schedule. The card has zero fraud liability that protects you from unauthorized charges. You can also be pre-qualified without it impacting your credit score as well.
Credit One Bank Platinum Card
Like the Unsecured Credit One card, the Credit One Bank Platinum Card boasts the same perks with a bonus of a free online monthly credit score tracker included.
This may be the best card on the list. It provides zero fraud liability that protects the user from unauthorized charges. You can get pre-qualified without harming your credit score, and it comes with automatic reviews for an increase in the credit line. There’s also free monthly credit score tracking and unlimited 1% cash back on gas and grocery purchases.
Rewards post to your account each month, and you can even choose a card design to customize the look of your credit card. The card does have an annual fee ranging from $35 to $99 and interest rates from 17.9% to 23.9%.
This credit card does require a checking account and monthly reporting to major Consumer Reporting Agencies. However, it does not require a security deposit. It is a genuine credit card that allows you to rebuild your credit. You are required to pay a processing fee once approved. Interest rate can vary depending on the card holder.
The Milestone Gold Mastercard is perhaps for more extreme cases. The card offers a quick pre-qualification process and a small starting credit card limit of $300. It also has an annual fee of about $75 to $99, offers custom designs, easy online account access, and they do not mind bankruptcies on your credit report. The card does, however, have a high APR of 23.9%.
Overall, each of these cards is not meant to be long-term. Anyone who is looking to get one should consider at some point changing over to a traditional credit card once they’ve rebuilt their credit using these alternatives. The main thing with credit cards is to be consistent with payments, pay on time and keep your balances low.
Lastly, it should be noted that interest rates/APR may vary for each person who is approved. Additional information can be found on each card’s website.
Shawn Christopher is an entrepreneur and investment director for the Page Murphy Investment Group. With more than six years of experience with investments and personal finance, he is an astute businessman and a frequent columnist for financial matters in pop culture and around the world.