Prepaid cards can be a solution for many people who don't need the hassle of opening accounts and the costs of big banks. Prepaid cards don't allow your account to go negative, so there are built in safeguards against overdrafts and other fees. Historically, prepaid cards had a fee schedule that could be costly depending on your usage. Great news is that these fees are beginning to improve for consumers.
Prepaid cards may be a great way to manage your montly expenses, but may not be your best option for building savings that will keep you from crisis in the future. As with any product, know the costs and the benefits before signing up! Here is an article we thought you would like.
Bankrate Study: Prepaid Card Fees Improving, But Still Vary Considerably. Bankrate surveyed 30 widely-held prepaid cards and found that while all charge fees, their fee structures vary greatly. The survey finds half of pre-paid cards available on the U.S. market either have no monthly fee or will waive it down, and that 10% have no activation fee if the card is purchased online or by phone.
Big banks and financial services companies are introducing cards with one flat fee, rather than several ancillary charges, and allow for free bank branch and ATM access. Bankrate finds bill payment fees are not charged by any of the cards it surveyed, which is down from last year’s 8% that did charge fees.
Inactivity fees are charged by only 17% of the cards surveyed, down from 29% last year. More than three in four (77%) do not charge for declined transactions under any circumstances, while 10% charge either $1 or $2 for transactions declined at an ATM.