Pre-paid Debit Cards
Prepaid debit cards are marketed to people who need a credit or debit card but don’t ha ve a regular checking account. While these cards seem to offer more protection than carrying cash, their fees can erode the cash put on the card very quickly.
Almost all pre-paid debit cards cost money to buy and activate. Depending on the card, this fee can range from $5 to $25. When compared to the new account fees charged by some banks, however, this is far from the scariest debit card fee.
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Every time a consumer uses his or her debit card, a pre-paid debit card deducts a transaction fee from the balance on the card. Although this fee is typically less than a dollar, it is charged every time a consumer swipes his or her debit card. If a consumer makes just one purchase a day and is charged a $1 transaction fee every time, he or she will have paid $30 in fees. For people who make several purchases every day, this could quickly add up to over $100 a month in transaction fees.
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In addition to these fees, however, most pre-paid debit cards also have maintenance fees. Every month pre-paid debit cards will deduct a fee ranging from $5 to $25. This fee is charged to a card even if the user does not swipe the card that month. Over a year, a card user could end up paying hundreds of dollars in fees.
If there is ever a problem with the card, pre-paid debit cards will charge a fee in order to speak with customer service. Checking the account balance, withdrawing cash, and using the card overseas will also result in the user being charged fees.
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Published in: Personal Finance
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