Prepaid credit cards are a convenient option for those who cannot afford to have a regular credit card and especially for those that don's possess a bank account or a checking account. These cards are a boon for some, as they don's require a bank account or a credit worthiness since it is a debit card. They can be purchased at the local supermarket or a drug store. The main feature is that there is no credit check and there is no requirement of a minimum balance. However, one has to check on the various fees that one would be charged. It is also not for people who wish to build up a credit history with the bank for the future. These are not linked and hence a bank account is not essential.
Generally, people prefer this card in order to keep track of their expenses and it curtails unwanted expenditure because consumers tend to stick to a budget when they own this card. However, care should be taken as this card does not come cheap. There are plenty of hidden costs that one must be aware of before opting for this card as one might end up shelling much more than expected by way of fees.
The list of costly fees includes:
- Firstly, the activation fee which could be anywhere between $3 to $20 while, some cards charge an exorbitant $39.95 to activate the card.
- Cash withdrawals at ATM's will cost anywhere between a dollar to $2.50 per transaction.
- The card charges a monthly fee of around $2.95 or $9.95. This might be waived off if it is an automatic direct deposit.
- In case of balance enquiry one must be prepared to shell out another 45 cents to around a dollar.
- A dormancy fee is charged in case the card is not used for a particular period of time. This is probably most outrageous.
- While in most cases customer service is absolutely free some cards charge a fee on calls being made to the customer service department.
There are many other drawbacks other than the high fees. For example, although credit card companies a zero-liability protection, these debit cards do not come under the purview of federal laws where there is any such protection for debit cards. Since all the charges are not mentioned in the packaging one should watch out as every transaction, usage of PIN, cash back at the counter, everything is charged and this could drain off one's resources if one is not cautious. For consumers who prefer a no-cost or a low cost option this would still be the best bet.