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Prepaid credit cards are those cards that are on the rack at a variety of quick stop stores, pharmacies, grocery stores and a handful of other merchants. People might use them to send money to a college student, pay a bill, charge stuff or even have an “off the grid” charge card that only the buyer might see and be aware of. Sounds pretty clandestine doesn’t it, and it can be. Money launderers and con artists use these and probably a host of other shady characters for shady reasons, but regular folks buy them too. They may not qualify for a regular revolving credit card because of bad credit or just don’t want to use a revolving credit type of account. You buy the card at a variety of stores, prepay any amount and get the card and a receipt. Then you must register the card with your personal information including a social security number. The card then gets activated. The card doesn’t have your name on it but the company may send you another card in the mail which might be a debit card or a copy of the card you bought. It may or may not have your name on it. I bought a few in my younger days and a few more over the years for gifts and to use when traveling but my experience with them has been dismal. I used one that had a colored dot on it and another that came from a large bank somewhere I had never heard of. Put simply, I don’t use them anymore and for good reason. I don’t have kids in college anymore, have business cards with revolving credit and don’t get them as gifts much in recent times. That said, I did see how they work and it stunk back then and still does. This opinion comes from my most recent experience getting one as a promo gift from a company I use. Every so often the cards would not work. I would be required to go to a website and reactivate the card or something like that. They used terms like verify due to suspicious activity or some damn thing. You could check your balance on the website you initially activated the card on and do some sort of verification. That’s if you didn’t lose your log in information you used when you registered the card, which I did on occasion. After all, I thought once the card was active, it would charge until it ran out. Not so I found out on more than one occasion. One time when the card stopped working, I had to call an 800 number, and it took me multiple tries to get a real person. I got some story that the computer deactivated the card somehow. Yeah, right. Another time a card stopped working for the person I gave it to as a gift. I logged in, couldn’t get in, then wrestled another hour or so on the website with no success. I finally got in and the balance was way off. In the company’s favor of course. Still another time, a card again stopped working, logged in and the balance was negative. Huh? I kept good records on the balance, so I knew something was amiss. What was amiss was my money. It went “missing”. Unable to get through to someone after many tries the website said to write a letter. Ok, so I wrote a letter. I never heard back and tried relogging in again. Another hour wasted, as was my money. You would think these cards would be regulated heavily to prevent this obvious confiscation of people’s funds. Apparently not. I am not the world’s most savvy technology person or website user, but you think prepaying a card and then using it would be pretty simple. Not so, and thinking many people that use these cards, or HAVE to use them, may be even worse at negotiating the clusters I saw. This might be due to their lower income, lower education or just a lack of exposure to such cyber nonsense. I am of the opinion that there is more than just petty theft going on here. I won’t be using these prepaid cards anymore. I don’t have any use for them and am thankful for it. Even if I did need a prepaid card, I wouldn’t buy one. Not after what I experienced. I will stick to company gift cards from specific companies from now on like Starbucks, Amazon or Walmart. Almost all big stores have them now. They work, and without all the BS, not to mention the theft, that I am of the opinion, is taking place on a massive scale. “Watching the markets so you don’t have to”

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services. Email: news@moneymanagementradio.com.

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Hyperinflationary Ride?

And just like that the Federal Reserve (FED), after embarking on an interest rate reduction program, came out and warned last week, “not so fast”.

With the price of oil increasing with the military action in Iran, inflation is likely to accelerate even faster than previously expected.

As detailed in last week’s Money Matter’s article, oil is a key ingredient of many of the products we buy. As the price of oil increases, this cost is passed on to consumers in higher prices.

As unexpected as the conflict was, the reality of higher prices now challenges the FED to act to preempt the inflation that is in the pipeline.

This translates to tighter credit and dampening consumer demand, which means raising interest rates.

Whereas the markets and Wall Street expected rates to continue to come down, now the opposite is becoming a real possibility.

Already higher prices are hitting consumer pocketbooks.

Unfortunately, I must now resurrect a warning I haven’t used in years when it comes to inflation, “You ain’t seen nothing yet”.

The conundrum the FED faces now was always going to occur and it was only a matter of time before they faced it. The sudden spike in oil prices has only hastened its arrival.

This conundrum was detailed in last week’s article but is worth repeating.

The inflation genie must be put back into his bottle quickly as inflation somewhat resembles a wildfire. It must be extinguished quickly before it gets out of hand. Once it takes off, it is that much harder to stop, and the FED knows that.

With the consumer already stressed due to increased living costs, and the market reeling in a mild but persistent freefall, what is ahead will likely not be pleasant.

I don’t envy the FED. It is caught between a rock and a hard place. Like I said, they would have had to face this problem eventually. Inflation was never going to recede as promised by both the FED and Washington. There was just too much money created during the Covid shutdowns to keep the world from imploding due to the business inactivity forced upon it. You simply cannot shut down three quarters of the world’s businesses and expect it to recover without serious problems.

Many analysts, including this one, warned against such actions. We will never know if the shutdowns helped or hindered the virus’s spread. What we do know, however, is that the massive amount of government spending to keep the financial wheels of the world spinning, and the consumers of the world able to put food on the table, has resulted in the egregious and persistent inflation we have witnessed in the last three years.

The spike in oil now only makes the situation much worse.

Hold onto your hats. I think it’s going to be a very rough ride.

“Watching the markets so you don’t have to”

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(As mentioned, please use the below disclaimer exactly) THANKS   (Regulations)   This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com.

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