Prepaid debit cards: It helps to know which fees can be easily avoided

For anyone looking for the best deal on a prepaid debit card, it helps to know which fees are the most common and which ones can be easily avoided by selecting the right card.

Consumer finance expert recently reviewed the fees and terms of 18 popular prepaid cards. The North Palm Beach company found some of the most common charges were monthly fees, ATM fees, activation fees and charges to receive a statement by mail.

But even those fees were not universal.

At the same time, the survey showed that the majority of cards did not assess fees for purchases at the register or paying bills. In addition most didn't charge a fee for calls to customer service or if a transaction was denied because of a low balance. Cardholders paying those fees may want to switch to another card.

In general, prepaid debit cards get the thumbs down from consumer groups because they tend to be laden with fees.

"For the majority of consumers, a low cost or free checking account remains the better option," said senior financial analyst Greg McBride.

Still, prepaid cards have been growing in popularity, especially among consumers who tend to overdraw their checking accounts or are unable to get a bank account or credit card.

Here's's rundown of fees among the 18 prepaid debit cards surveyed, starting with the most common ones:

-- Monthly fees. Two-thirds -- 12 of 18 cards, or 67 percent -- charged monthly fees ranging from $2.50 to $9.95. Of course, that means one-third did not charge a monthly fee. A few cards waived the fee with direct deposit or if the cardholder loaded $1,000 to $2,500 on the card.

-- ATM fees. Sixty-one percent -- 11 of 18 -- charged for a withdrawal at the issuer's own automated teller machines, ranging from $1.50 to $2.50. All 18 cards had fees for withdrawals at another institution's ATM, although two cards permitted one free withdrawal per month. Fourteen of 18 cards -- 78 percent -- charged a balance inquiry fee ranging from 45 cents to $2.50.

-- Activation fees. Sixty-one percent -- 11 of 18 -- charged a fee to activate the card ranging from $3 to $14.95.

-- Statement fees. Sixty-one percent -- 11 of 18 -- charged $1 to $5.95 to receive a mailed statement. One card did not offer paper statements.

The majority of cards did not charge for:

-- Customer service. Thirty-nine percent -- 7 of 18 -- assessed fees for help from a live teller, ranging from 50 cents for a balance inquiry to $4.95 for a cash transfer. A few of those cards allowed at least one free call per month.

-- Inactivity. Thirty-three percent -- 6 of 18 -- charged fees ranging from $1.95 to $5.95 after three to 12 months of inactivity, while four simply closed the card after three to five months of inactivity.

-- Declined transaction. Thirty-three percent -- 6 of 18 -- charged a fee for some or all declined transactions, ranging from 25 cents to $2.

-- Point-of-sale. Twenty-eight percent -- 5 of 18 -- charged from 49 cents to $2 for purchases at the register. Two of those five didn't charge if the transaction was signature based.

-- Bill payment. Twenty-two percent -- 4 of 12 -- assessed fees ranging from 50 cents to $1.50 to use the card to pay bills online. Two of the four allowed three free bill payments per month before charges kicked in. noted that none of the issuers charged a fee to reload their cards, but fees to reload at retailers were common.


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