Beware Of Fees With Prepaid Debit Cards
BOSTON (CBS) – Prepaid debit cards are becoming more popular all the time. Recently, they’ve gotten more attention as financial guru Suze Orman came out with a card bearing her name.
These cards can be useful when it comes to managing money, but you do have to pay attention to the rules.
Prepaid debit cards are aimed at those ‘unbanked Americans’ who don’t have a bank account, can’t get one, or just don’t want to deal with a bank. Users upload money on the card and pay transactions on line or in a store, just like a regular debit card.
WBZ-TV’s Paul Ebben reports
Some cards have drawn criticism for fees that can eat into the balance. Greg McBride of www.bankrate.com said “The primary downside of prepaid cards are the fees, and while the fees themselves are very modest, in isolation, it’s the fact they can mount quickly, in the course of just traditional financial transactions.”
That can include fees for opening or loading funds on the card, making ATM withdrawals, or even monthly or yearly fees for just holding the card. This makes it critical to understand the terms of the card before you activate one.
McBride said, “The smaller the print, the more important the words. That’s where you’re really going to find if this is really a fit for you. You really have to be dialed into what the fees are, what’s going to trigger those fees, and what you need to do to avoid them.”
Think ahead about services you need in a card, whether that’s being able to call customer service or receive a paper statement every month without being charged extra.
More people will be paying attention to those details as it looks like a prepaid debit cards are here to stay. They are now the fastest growing method of payment, having grown 35% last year alone.