If you have ever placed an order via telephone or over the Internet one of the things you may have noticed are these sneaky “offers” for affiliated (or unaffiliated) services like either a subscription for something tied to whatever you ordered or some offer for something else that you can try “free” and if you don’t cancel within any period from 7 to 30 days, they will automatically bill you on your credit card some fee from $9.95 to $39.95 a month (or more) until you do cancel by calling some other toll-free number that in all probability they don’t tell you again and if you didn’t take it down you won’t know it until (maybe) it appears on your card statement in a month or two, and you’re scratching your head trying to remember what it is you’re being charged for.
Sometimes if you don’t listen carefully to discover that they are including this as part of your order or specifically tell them you don’t want it it’s going to be included, it will and you’ll see irritating subscription charges either on your credit card statement or your bank statement if you use a check card (an ATM card which has a bank logo of Visa or (in extremely rare cases) Mastercard).
Worse, if the charge for this subscription item exceeds the balance available on your card, if it’s a check card from your bank, chances are the bank will approve the transaction, pay the charge, then hit you for an additional $35 in overdraft fees for the overdraft which exceeded the balance in your account. The same may occur if the charge will cause you to exceed your credit limit from your credit card issuer; if you’re lucky, your credit card declines the charge, but banks and credit card companies make a lot of money from overdraft charges, don’t expect to be very lucky in this respect.
So how do you avoid this problem? By avoiding this problem; don’t use your credit card or check card to place phone or Internet or (if you actually do use the U.S. Mail to place your order) mail orders where there is a possibility of being charged for subscriptions. Only problem is, if you want to order something by phone or Internet you need a credit card. No you don’t, you just need a credit card number. So we need a way to obtain a credit card number without it causing you to be subject to an overdraft fee. Now you don’t have to do what I’m about to describe for every transaction, only ones where they might come back and run additional charges such as subscription fees or recurring charges. If you’re not sure if they will or can’t find out in advance, presume they might and use the following strategy.
First I’ll explain what you’re going to use, then I’ll explain how you’re going to use it. If you visit a CVS, Rite Aid or probably any other drug store chain, and even other type of stores including some grocery chains and gasoline stations, they often sell preloaded bank cards, which they call gift cards, CVS I know offers all four: American Express, Discover, Mastercard and Visa. The value of these cards is usually available in $25, $50 and $100. Depending on the value stored on the card, they’re probably either $4.95 or $5.95. The card is good until the expiration date on it or until you use all of the value on the card.
Also, your bank or credit union probably sells a prepaid Visa Gift Card, and if you check, it might be cheaper; my credit union charges $3.95; BB&T charges $2.95. The additional advantage of a bank- or credit union-issued gift card is that you can decide to load a non-standard amount, anything from $25 to $500. In either case, however much money you put on the card is the maximum total amount you can charge on that card; you cannot reload it.
If you want to be able to reload the card later on (because you’d like to use it multiple times) or you want one that has your name to appear on the card, you can pay a little more ($9.95) and get a reloadable card, and in that case, you specify how much money to put on the card, from $20 to $500 or sometimes more. If you decide you want to put more money on the card later on, it will cost another $4.95. In this case, you do not get the card immediately because they have to impress your name on it. You pay for the card at the store, you call a toll-free number (in some cases, you may be able to log-on to a web site) and you give them your name and address along with the transaction number from the receipt, and the agent will give you the credit card number, the expiration date and 3-digit security code so you can use it for internet or phone transactions immediately; the physical card (with your name on it) comes in the mail a few days later.
One disadvantage is that after 6 months (“beginning with the seventh month after activation of this card”) the issuer will start “dinging” you for, typically, $4.95 a month. (On the reloadable bank card with your name on it they may start charging you the $5 bucks from the following month, check the fine print.) So don’t buy a card with more money on it than you can use up in six months. Also, be aware that you’re probably going to “lose” a little on the card, by having small amounts left over, typically something like $2 to $3. I’m proud to say that on one BB&T gift card I used all of the value on the card but 9c!
One reason for using a reloadable bank card is that in some cases (for an additional fee, of course) they will permit you to load more than $500; some will go as high as $5,000, although if you have that much around you probably would just use a regular credit card.
Don’t confuse these preloaded bank cards with gift cards for a specific merchant, these are usable at any place that can take that bank card (AMEX, Discover, Mastercard, Visa) with one exception; any place that runs a temporary charge because they don’t know how much your transaction will be. You can use them at a gas station but you have to go to the cashier and specify an amount for the charge, you can’t use them for “pay at the pump” because the pump only tries $1.00 then adjusts the transaction after you finish pumping. You also probably can’t use them for hotel and rental car charges for the same reason, but check with the place, if you have enough on the card or they know you, you may be able to get them to run a specific fixed charge, and as long as it’s less than the amount loaded on the card, that will work. It may also work for a preloaded bank card that has your name on it, it won’t hurt you to try or ask. Also restaurants often add a gratuity of anything up to 20% of the price of the meal, be aware of this.
In any of these cases, a preloaded bank card works essentially the same as a “regular” credit card or check card at almost any merchant. Many of these cards even have the capacity to go to a web site and put your name and sometimes address and/or phone number on the record for the card for merchants who do name and/or address verification against the card (for security purposes), as well as enabling you to list transactions which have posted to the card. The card will have a regular 16-digit (15 for American Express) card number, they have a 3-digit security code on the back (and 4-digit on the front for American Express), and they have a mag strip for “swiping” at places where you present a card. You typically will not be able to use one at an ATM, however.
Now, because you buy these prepaid bank cards for cash at a place that, in most cases, does not have your name or address, and has no way to obtain more money out of you (unlike your credit card issuer or your bank who issued your check card), the card issuer will not, under any circumstances, allow you to run an overdraft on the card. The amount of money on the card is the maximum possible liability you’re going to have for its use.
Now how you use it. Let’s say you see some infomercial where they are selling some kit to do something like sell real estate or stuff on eBay or some product they offer like a can opener or a blanket with sleeves. And the price is, say, $29.95. With shipping it’s probably going to be another 5, 10 or 15 bucks. So, you whip out a prepaid bank card with a $50 limit. You call the toll free number, a machine takes your name and address and asks you to tell them your card number. So you read or punch in the number, and the expiration date, and possibly the security code on the back.
So the transaction is approved, and in a few days you get whatever you ordered. But, during the call, they might try to make you wade through anything from one to half-a-dozen additional offers, or they mention how, now that you’ve bought this, you’re going to be offered a free trial subscription for something else, and if you like it, do nothing; it will be conveniently charged to the card that you just gave them for some monthly fee from $3.95 to $39.95 a month. Maybe they give you the option to reject it or not, but it doesn’t matter. You’ve used a card with a $50 limit; you’ve spent, say, $29.95 plus another $15 on shipping for a total of $44.95.
All you have left on that card is $4.95, and that’s the maximum amount anyone will ever get for any further charges on that card. They can’t get so much as another dime above the $4.95 left, and if they do get more (which almost certainly will be impossible), hey, it ain’t your problem; the card issuer has no way to get to any more of your money. So they will never allow an overdraft on the card. If you don’t want the merchant to know who you are in case they complain, make up a name on the order; it’s perfectly legal to call yourself anything you want as long as you’re not committing fraud. Since you’re paying them with a prepaid credit card, they’ve got their money before they ship you whatever you have ordered so there’s no possibility of fraud because they have their money in advance.
So, if the merchant actually calls to complain that further charges won’t go through, hey, it ain’t your problem; they got their money for whatever you ordered; you didn’t want the other thing anyway. And you never have to pay again for subscriptions for things you have no interest in. And if the merchant won’t accept your prepaid card which has more than enough to cover, maybe that’s a good sign that you probably don’t want to deal with them because it’s probably a really good sign that they’re trying to collect more than you thought you were going to have to pay them.