The prepaid cards are like debit cards that one can buy at a super market or a drug store and use wherever credit cards are accepted. In fact, they also have a logo, whether that is Discover, American Express, MasterCard or Visa, even though they are not linked to any company. Most importantly, these cards neither need a minimum balance nor a credit check. Even as the demand for these cards is increasing due to more and more people trying to stick to a budget and avoid costly fees, many fail to realize that they are just as expensive or in some cases even more. Extensive analysis of the websites by the Consumers Union has showed that these cards charge customers heavily although all the various kinds of fees are not listed on the packaging. These rules also vary a lot from card to card.
A report released by Consumers Union based on the review of several prepaid cards showed that many different types of fees are levied on people who use these cards which can quickly eat away into their balances. There is an activation fee where customers have to pay between 3-20 dollars to have the care turned on, although there are some cards which charge over 30 dollars. There is a monthly fee on these cards that varies between 3-10 dollars. Some cards waive the fee off if customers set up an automatic direct deposit. Some cards have other rules such as a minimum balance or using the card a minimum number of times.
These prepaid cards can also be used to get cash from ATMs, although there is a charge every time one wishes to withdraw cash. Some cards give free withdrawals for a fixed number of times while some cards do not charge anything if usage is within the network of ATMs. There is a charge for balance enquiry as well that varies between 45 cents to 1 dollar. Although most cards do not charge anything for talking to the customer service, some prepaid cards do levy some charges for calling the customer service. There is a dormancy fee as well if the card is not used for a stipulated period of time along with a monthly fee for inactivity. There are a few more downsides including doubts over whether there is liability protection at all on these cards. Moreover one cannot build a credit history by using these cards.