Prepaid vs. Bank Accounts – Hidden Fees

                     

In a perfect world, we would all get a standardized checklist depicting any fee potentially charged to us when opening a new account or plastic card. Some might argue that all the information you require is contained in an account’s terms and conditions or cardholder agreement provided by the financial institution. Alas, this may be true but between the abundance of legalese and the fact that every disclosure looks different, it becomes a nitpicking nightmare to try and compare fees and rules associated with these financial tools. Although we can’t do this work for you, we will try to at least list some of the most common hidden (and not-so-hidden) fees in traditional bank accounts and prepaid debit cards alike.

Keep in mind, these are not all-inclusive lists, but here are some fees that you can red-flag and research when comparing accounts.

Bank Account Fees

  • Overdraft Protection – Protection to cover charges in excess of your account balance – can reach amounts over $35 per transaction. Savings accounts can sometimes be attached to avoid this fee.
  • Monthly Account – This fees is usually charged just for the priviledge of possessing an account – can vary widely from a few bucks to over $20 per month. Sometimes avoided with minimum balance.
  • Minimum Balance – If you are unable to keep an average monthly balance of some amount, say $1500, you might be charged this fee which can vary widely.
  • Non Bank ATM – Usually, if you use your bank’s ATM, there isn’t a charge, but walk a few blocks away to use another and you will feel the sting of this fee.
  • New Checks – These aren’t hidden fees, but can put a dent in your budget as they can cost upward of $20 to $30 for a regular order. Use free online bill pay if available.
  • Bank Teller – I know, this one sounds crazy, but some banks actually charge for this.
  • Online Banking – Make sure to do your homework because this is another wacky fee that might take you by surprise.
  • Large Deposits – This one doesn’t make any sense at all, but it does happen.
  • Excessive Transactions – Maybe this makes a little more sense, but I would avoid a bank charging this fee.
  • Wire Transfer – Sometimes you need to send money urgently to a loved one or friend. This could be a substantial fee at some banks.

Prepaid Debit Card Fees

  • Monthly Maintenance – For the priviledge of keeping a prepaid card, you might be charged this fee although in many cases will be waived for direct deposit or significant fund loads.
  • Negative Balance – This occurs when you spend more than what is in your account. Typically, your card will just be declined, but some charges sneak in. Many cards don’t charge this fee.
  • Paper Statement – With online account maintenance technology, there is no need for this unecessary fee. Our advice is to never order paper statements – check your account online.
  • Teller Cash Advance – Maybe in an emergency, but why go to a bank teller when there are so many ATM’s available for a typically smaller charge of around $2 vs. $5 or more.
  • Account Closure – This can be an aggravating charge since you intend to stop using your card anyway. This fee can vary widely up to $20 or more.
  • Bill Pay – Some cards charge per transaction for this service. Find a card that either doesn’t have the fee or use your card to pay bill at each vendor’s web site.
  • Inactivity – Check this one carefully, as some cards require use every 60 to 90 days. Some do not charge this fee at all and others might charge $10 to $20.
  • Customer Service – I have never understood this one, but some cards charge for live support and others charge even if the call is automated.
  • Lost or Stolen Card – Several prepaid companies will send you a new card free of charge, while others might charge a few dollars and up to over $10.
  • Expedited Card Delivery – Avoid this fee by keeping close track of your card. Some companies really stick it to you with $40 and up to overnight you their product.

While fees are necessary with any financial product, there are some really competitive players and some not-so-competitive in the marketplace. Some consumers enjoy many features like rewards and other extras with their financial tools. Please take some time and compare several products for your own peace of mind.

Filed under: Debit Card News
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