Prepaid Debit Card Reviews, Complaints, Etc

Tag: National Priorities for Consumer Action

What is A Prepaid Debit Card? Glossary & Common Terms

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Courtesy of Linda Sherry, Director of National Priorities for Consumer Action, here is a comprehensive list of fees associated with prepaid debit cards.

by Lucy Lazarony

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What is a Prepaid Debit Card? Glossary and Common Prepaid Debit Card Terms.

Purchase fee. This is a one-time charge for buying the card, generally in a retail location.

Activation fee. A one-time charge that is also known as an opening fee, initial load fee or set-up fee, can range from free to $30 or more. This is a fee that must be checked carefully, particularly if you also have to pay to buy the card (see purchase fee above).

Monthly “maintenance” fee. This is a common fee that can vary widely, up to $10 per month; may be reduced or waived if monthly reload minimum is met or you set up direct deposit; some cards may also charge an annual fee.

Reloading fee. This fee is charged for adding funds to the card, which can vary by type or source of funds (cash, for example); third-party fees for cash loads made at agents (such as a participating chain of stores) also may apply.

Funds transfer fee. This kind of fee may be charged on certain funds transfers, such as from one card to another or from a bank account to the card.

Purchase transaction fee. This fee may be waived with a minimum number of transactions in the month or with direct deposit; may be charged on debit (personal identification number, or PIN) transactions and not on credit (signature) transactions, or vice versa.

Click HERE for our current ratings of the Best Prepaid Cards including the Best Overall No Fee Visa Card and see how this card compares to others.

Denied transaction fee. This fee may be charged if you try to make a purchase or an ATM withdrawal that exceeds your account balance.

Overdraft (or shortage) fee. This type of fee is charged by the relatively few cards that will allow you to spend more than you have loaded on the card; typically ranges from $10 to $25 or more.

Cashier withdrawal fee. This fee may be charged when cash is withdrawn at a bank or an agent location.

ATM withdrawal fee. A fee charged for withdrawing money from an ATM (unless the card offers free withdrawals at participating ATM locations or a certain number of free ATM withdrawals per month); another, separate fee of $1 to $3 is taken by most ATM owners/operators.

Balance inquiry fee. This fee may be charged for getting your balance statement at an ATM.

Foreign currency conversion fee. This type of fee is charged if you use your card outside the U.S. (typical for credit and debit cards, too).

Inactivity fee. This fee may be assessed if you don’t make at least one transaction in a certain period (typically 60 or 90 days).

Card replacement/reissue fee. This fee may be charged if your card is lost or stolen.

Paper statement fee. A type of fee charged for requesting a paper statement rather than viewing your statement online.

Customer service fee. Some card issuers charge this fee when you contact a live customer service representative (as opposed to using the automated help system); some cards may even charge a small fee for using the automated phone system.

Closure fee. This type of fee is charged when you close the card.

Other Related Reviews and Resources That Might be Helpful:

Click HERE for our current ratings of the Best Prepaid Cards including the Best Overall No Fee Visa Card and see how this card compares to others.

April 20, 2020
Nine Tips for Avoiding Fees on Prepaid Cards

Fees are inevitable with prepaid debit cards. But there’s much you can do to keep them low.

By Lucy Lazarony

To get the most value out of a prepaid debit card, you’ll want to avoid and minimize all the fees that you possibly can.

“You want to understand the fee structure of the card,” says Jeanne Hogarth, Vice President of Policy, at the Center for Financial Services Innovation. “Are there fees to do balance inquiries? Doing things online generally should be free. If you need to talk to a real live person, can you do that and is there a fee?”

Monthly maintenance, transaction and reload fees are at the top of the list of prepaid card fees that you will want to avoid, according to Linda Sherry, Director of National Priorities for Consumer Action.

Sherry suggests these nine tips for avoiding fees on prepaid debit cards:

1)   Setting up direct deposit for your paycheck or other monthly income to avoid prepaid card monthly maintenance and transaction fees.

2)   Loading a certain amount onto your card each month.

3)   Maintaining a minimum balance on the card.

4)   Getting cash back when making a purchase at a grocery store or other retailer, instead of paying an ATM fee.

5)   Checking your balance by whichever method is free. (It’s very common to encounter a charge to check your balance at an ATM. Avoid card issuers that charge a fee to check your balance online or using an automated phone help line).

6)   Loading by whichever method is free (if there is one).

7)   Making transactions using whichever method is free (if either PIN or signature transactions are free).

8)   Avoiding transactions that go over your balance.

9)   Using automated “help” rather than a live customer service representative, if your issuer charges you for this, and viewing your statement online rather than getting a paper copy.

Once you’ve avoided all the fees on a prepaid card that you can, the next step is minimizing the fees you are required to pay for using the card.

“Scrutinize fees that are mandatory and cannot be avoided,” Sherry advises. “For example, a few cards offer fee-free transactions while others waive certain fees when you maintain a minimum balance or use direct deposit.”

And you may be able to avoid monthly fees because of how often you use a prepaid debit card, Hogarth says.

“Some cards even have no monthly fees but you have to use it five times a month,” Hogarth advises.

And if you like withdrawing cash at ATMs, Sherry recommends using network ATMs because “even if there is a fee, it will be less expensive than using an out-of-network ATM.”

A prepaid card issuer’s website may be the best source of information for a card’s fee information, according to Sherry.

“Fee disclosures may appear on the card packaging, but the card issuer’s website will probably be your best source of complete information,” Sherry says.

Digging through the fee information for prepaid cards could take some time. This fee list from Sherry provides definitions of 17 fees charged by prepaid card issuers.

“Unfortunately, there’s no law that requires a standard fee chart for prepaid cards but some issuers are more upfront about their fees than others,” Sherry says. “Before you buy a card, look for a prepaid card where the issuer discloses all the fees clearly. When you’ve narrowed down your options, calculate your monthly cost for each card based on how you expect to use it.”

September 30, 2013
Can you Pay for Health Insurance with Prepaid Cards (Benefits and Problems)?

The Benefits and Pitfalls of Paying for Health Insurance with a Prepaid Debit Card

By Lucy Lazarony

2019 Update! According to Ihealthplans.com, at least within the individual health insurance Marketplace, insurance providers are required to accept money orders and pre-paid debit cards, which is good news for prepaid card owners. Providers do not have to accept credit card or debit card payments unless states make that a requirement (so varies by state), although many insurers currently accept all of these forms of plastic payment.

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Original article from 2013 (kept for archival purposes): Accepting payment by prepaid card may vary from state to state and between insurers. Insurance companies prefer automatic bank drafts through a checking account, since this costs the least amount of money.

You’ll be able to pay for new health insurance exchanges with a prepaid debit card. A new rule released by the Department of Health and Human Services last month requires insurers participating in new health-insurance exchanges to accept payments from consumers by prepaid debit cards, cashier’s checks, money orders, paper checks and bank-account transfers.

“The HHS rule just means that people without checking accounts can pay for exchange health insurance plans by getting a prepaid card,” says Linda Sherry, director of National Priorities for Consumer Action. “Several different forms of payment will be accepted by the exchanges, including prepaid cards, cashier’s checks, money orders, paper checks and bank-account transfers.”
The exchanges are part of a new health insurance marketplace under the Affordable Care Act, also known as Obamacare. The marketplace is set to open on Oct. 1, when plan and pricing information will be made available to consumers and open enrollment begins, according to HealthCare.gov.

Insurance coverage is set to begin on Jan. 1, 2014 and the open enrollment period extends all the way to March 31, 2014, according to HealthCare.gov.

The addition of prepaid cards as a payment option make these new health plans more “convenient” to consumers without bank accounts, Sherry says. “Otherwise, an unbanked person would have to stand in line for a money order or cashier’s checks each month or quarter to pay for them,” Sherry says.

Another advantage of paying for health care with a prepaid debit card is having an online record of payments and insurance for tax credits on insurance premiums, says Jeanne Hogarth, vice president of policy at the Center for Financial Services Innovation. “You might want to be careful of the card you choose so you can view it online,” Hogarth says.

A study from Jackson Hewitt estimates that more than one in four uninsured Americans — about 8.5 million people — who would be eligible for Affordable Care Act tax credits on insurance premiums, do not have a checking account.

When shopping for a prepaid debit card to pay for health care, take a close look at the fee structure of each card, advises Judith Rinearson, chair of the government relations working group of the Network Branded Prepaid Card Association.

“Keep in mind that general use or general purpose prepaid cards often come in two different models. Some come with a monthly fee – similar to a monthly fee that might be charged by a bank for a bank account. Those fees are often less if the cardholder signs up for direct deposit of their wages or salary. If you anticipate using the card a lot, going for a card with a flat monthly fee model may save the most money,” Rinearson says.

“The other model, often called “pay as you go,” does not have a monthly fee, but instead charge fees every time the card is used – such as a fee when the card is used to make a purchase or to make an ATM withdrawal. For those who intend to use the card only occasionally – perhaps for their monthly health insurance premium payment – this may be a better option.”
Rinearson also recommends choosing a prepaid debit card with free balance inquiries and text messaging. “Personally, I like cards that provide free balance inquiries and access to online transaction data and text messaging,” Rinearson says. “And fortunately, I have found the majority of cards out there routinely do provide such services for free.”

Here’s a short checklist from Rinearson for choosing a prepaid debit card:
• Reasonable fees
• Easy to access balance and transaction information
• Access to cash not just at ATMs (where a fee is often charged) but also at the point of sale (where “cash-back” is often free of charge)
• Protection against lost or stolen cards or unauthorized transactions

March 18, 2013