credit cards

5 downsides to prepaid debit cards

Users face lots of fees
2 of 7

A slew of fees can quickly ding your prepaid debit card.

Fees may be charged for activation, withdrawals, overdrafts, paper statements, balance inquiries and even dormancy. For example, all 19 prepaid cards studied by Consumers Union charge fees for withdrawing cash from ATMs, ranging from 99 cents per withdrawal to $2.50.

But dormancy fees, or fees charged for nonuse of a card, are the most problematic, says Suzanne Martindale, an associate policy analyst at Consumers Union. "They would never happen with checking accounts," she says, adding that customer service fees can also add up.

The difficulty in computing card costs is in finding a fee schedule for prepaid debit cards, she says. "The packaging doesn't list them," Martindale says. "So you may find fees after the fact, unlike checking accounts."

Also, fees vary widely. So make a list of the ways you'll use the card -- such as online -- and compare fees for those transactions.

Still, some cards do carry low fees. The Mango Prepaid Card offered by Mango Financial Inc. has no hidden fees. Walmart's Moneycard also has simple fee schedules that are easy to understand.




Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 16.22% --0.00 16.22%
Cash Back Cards 16.49%  0.07 16.42%
Low Interest Cards 11.44%  0.09 11.35%
Credit cards on a table

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.


Credit Card Blog

Mitch Strohm

Will card fraud increase at the pump?

Fraudsters may be taking advantage of the lack of security at pay-at-the-pump card readers.  ... Read more

Partner Center

Connect with us