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Helping Consumers Find the Best Cards, Build Credit and Prosper

What’s the difference between a good prepaid debit card and a really lousy one? Fees, fees and fees. If you take nothing else from all of the content we have up on the site, be sure to at least understand that fees are your enemy. And unfortunately, many prepaid debit cards are chock full of them: monthly fees, fees for just opening the account and even fees, called inactivity fees, for not using your card enough. A wise shopper will act like Sherlock Holmes and sniff out every last one of these dreaded fees and be absolutely ruthless about finding the card with the fewest and lowest fees.

To do that, you’ll have to go to the websites of the companies issuing the cards and compare the different offers. Alternatively, you can visit a credible and objective website, like this one, and comb through the rankings of the good, bad and ugly prepaid debit cards available. The good news is that enough consumers have complained about the fees – and enough legal challenges have been filed by states – that some prepaid card providers have minimized fees and added fraud and theft protections. American Express has gone so far as to extend Federal Deposit Insurance Corporation (FDIC) protection to its prepaid debit card products. Still, despite the move in the right direction, always, always read the fine print before you hand over any of your cash.

But once you do actually choose a card, the process for getting one is simple. Because prepaid debit card issuers are not granting you thousands of dollars in credit – which they’d want to know you’d pay back – they don’t run credit checks. Instead, applications let the providers of cards verify your identity and collect basic personal information. Securing a major retailer’s prepaid card takes just a few minutes and mostly involves you handing over some cash in exchange for a card imprinted with the Visa or MasterCard logo. If you have a government issued photo identification and between $3 and $5 to cover the setup fee you should be good to go. Once you activate the card, the amount of money you can spend depends entirely on how much you fund it with – which is known as loading or reloading the card. The card can then be used just about anywhere a credit or debit card is accepted. If you opt to apply online, expect to spend about a minute completing the application and just 15 seconds waiting for an acceptance. The card issuer will then mail your card to you and it will cost about $5 to activate. Procedures to load money onto a card vary, but providers generally encourage users to set up direct deposit.

Curtis Arnold Founder: Curtis Arnold
Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about personal finance and credit cards since 1998. Curtis is the author of “How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line” (FT Press, 2008)…. Read Curtis Arnold's Bio