Holiday shoppers choosing to enjoy the convenience and ease of using prepaid debit cards should consider the pros and cons of all the different card choices out there. Many consumers these days are using prepaid debit cards through necessity or choice. Many of this season’s shoppers are on a strict budget, are facing credit challenges or simply do not want a checking account. Given the ever increasing demand for prepaid debit cards, an enormous amount of choices exist in the prepaid space.
If you are not familiar with a prepaid debit card, here’s how it works: A predetermined dollar amount is loaded on a card and then the card can be used as a regular credit or debit card. There is no minimum balance or credit check needed, nor is the card linked to any bank account. There can be numerous fees associated with prepaid debt cards, depending on the issuer, so care should be taken when choosing a card. Some common fees include: monthly fees, activation charges, balance inquiries, cash withdrawals, transaction fees, non activity charges and even customer service fees. Here are some typical ranges of the different charges:
Monthly fee – $3 to $10
Activation fee – $3 to $20
Balance Inquiry fee – $0.50 to $1
Cash withdrawal fee – $1 to $2.50
Transaction fee – $1.50 per purchase
Inactivity fee – $10 if not used for several months
Customer Service fee – $1 to $4
Connecticut BBB President, Paulette Scarpetti says the different fees are a good reason for shopper to look around and compare for the best deal and carefully read the terms and conditions.
“These cards are perfect for many consumers, but they may not be economical for everyone, depending on how many transactions they make and the cards’ fee structures. The number and type of fees can vary from one card to the next so BBB recommends consumers compare the terms of prepaid cards before buying one.”
The bottom line is that prepaid debit cards offer many benefits for consumers, but just like any product, buyers should compare cards to guarantee that the benefits outweigh the costs. To find more information on personal finance and managing credit at the Better Business Bureau website, click here.