Prepaid Card Fees Dip Some, But Still Poorly Disclosed

Monthly fees for prepaid cards range from $2.95 to $9.95 – with activation fees as high as $14.95, according to a Consumer Reports analysis.
Fourteen of the 16 prepaid cards examined charged a fee to withdraw cash from a domestic ATM, ranging from $2 to $2.50.
Consumer Reports did find industry competition is starting to reduce fees.
But it also found that prepaid card costs are still not being sufficiently disclosed upfront and fees can still be extensive – including fees for checking your balance or for not using your card at all, the so-called “inactivity fee” still charged by five cards out of those analyzed.
Prepaid cards are reloadable and can be used to make payments, similarly to debit cards. They look like typical credit cards and bear the network logos of Visa, MasterCard or Discover, and the word “debit” is on the front of the card.
The Federal Reserve has found that prepaid cards are the fastest growing non-cash method of payment. The industry is targeting the estimated 60 million adults with limited or no access to bank accounts.
Consumers Union, the policy and advocacy arm of Consumer Reports, is urging the Consumer Financial Protection Bureau to require prepaid card issuers to improve fee disclosure practices and “abide by the same mandatory protections consumers are guaranteed by law when using debit cards linked to their bank accounts.”
Consumers can normally only find information about some of the fees charged by card issuers before they purchase a card at a store.
“While some prepaid card issuers are providing direct links to fee schedules on their websites, others make finding this information more difficult,” Consumers Union said in a statement.
Consumer Reports examined 16 prepaid cards. Here’s a breakdown of the results:
Fees to Activate Your Card: 9 of the 16 prepaid cards reviewed charged consumers a fee to activate their card. Activation fees ranged from a low of $3 for the Walmart Money Card, nFinanSe card, and the Approved Card to $14.95 for some select RushCards. Some prepaid card issuers like NetSpend and Western Union are no longer charging activation fees.
Monthly Fees: 13 of the 16 prepaid cards charge monthly fees, ranging from $2.95 for the nFinanSe card to $9.95 for the Vision Premier card and the Univision card. Some prepaid cards, like the Bank Freedom card, will waive the monthly fee if the consumer makes a minimum deposit each month. Some cards, like the RushCard, give consumers the option of choosing the monthly fee plan or a per transaction fee plan.
Fees to Get Cash: 14 of the 16 prepaid cards examined charged a fee to withdraw cash from a domestic ATM, ranging from $2 to $2.50. This does not include the additional charge imposed by ATM operators. Consumers using Green Dot and Univision prepaid cards can get free access to Allpoint network ATMs, located in numerous retail locations. Otherwise they pay a fee to use a non-network ATM.
Fees to Find Out Your Balance: 12 of the 16 prepaid cards impose a fee for checking balances at ATMs, ranging from 45 cents to $1 per balance inquiry. The ATM operator may charge an additional fee. Many prepaid card issuers provide other methods to check balances for free, such as by email, text message, or phone.
Fees to Get a Paper Statement: A number of prepaid cards no longer provide information about the availability of paper statements in their card agreements. Seven of the prepaid cards charge customers a fee to get a monthly paper statement detailing their transactions. Paper statement fees ranged from $1 for the Rush Card to $5.95 for the NetSpend Visa card. Many of the prepaid cards provide free access to monthly statements online or through email or text alerts.
Fees For Customer Service: Some prepaid cards enable all consumers to speak to a customer service representative for free. Other prepaid cards provide free customer service if the customer sets up direct deposit or only makes a limited number of calls per month. A few prepaid cards charge customers each time they make a call to customer service, ranging 50 cents per call for the NetSpend Visa card to $2.99 per call for the UPSide card.
Fees for Inactivity: 5 of the 16 cards charged fees when cards are not used after a certain period of time. These dormancy fees range from $2.50 per month for the H&R Block Emerald Card (after three months of inactivity) and the Western Union MoneyWise card (after 13 months) to $5.95 per month for the NetSpend Visa card (after 90 days of inactivity).

One thought on “Prepaid Card Fees Dip Some, But Still Poorly Disclosed

  • March 30, 2012 at 3:56 pm
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    We are pleased to see Consumers Reports recognize costs associated with prepaid cards continue to drop due to competition within the marketplace. Consumer satisfaction with the value these products provide is the reason behind their strong growth.
    NBPCA is supportive of tools to help consumers comparison shop and better understand how their prepaid cards work so they can find the card which best fits their personal needs.
    We disagree with the charge that prepaid cards have weak consumer protections. Payroll cards and most government benefits cards come with Regulation E like coverage without paper statements. Reloadable prepaid card issuers voluntarily offer equivalent protections, and banks who issue reloadable prepaid cards offer FDIC insurance on a pass through basis to cardholders. The card brands, Discover, Visa, MC and American Express offer zero liability protections to holders of consumer reloadable cards which may be lost or stolen, as well as chargeback rights, to the same extent these rights apply to credit cards or debit cards bearing the network’s brand.
    Prepaid cards are another way for Americans to avoid debt and interest charged, manage their finances, and open the door to our card-based financial system for large segments of our population who may not have access to or qualify for a checking account.
    Jennifer Tramontana, Network Branded Prepaid Card Association (NBPCA)

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