Fees for overdraft protection
Thought you were getting a prepaid debit card to escape overdraft fees forever? Think again.
Some prepaid debit cards offer some kind of overdraft protection, and that can lead to fee deja vu for prepaid users who fled conventional checking accounts over cascading overdraft fees, says Feltner.
"The value proposition of prepaid cards is that you put your money on first, and then you only spend what you have. And that value proposition gets a little foggy when you see prepaid debit card providers start offering overdraft protection," Feltner says.
"The potential to incur a significant amount of fees by even making very small overdrafts is the primary consumer concern, and when debit card providers add overdraft, they're very much undermining the value," he says.
To avoid getting tagged with overdraft fees, check the terms and conditions of your prepaid debit card to make sure it doesn't allow overdrafts, Feltner says. If it does, it might be best to move on.