Prepaid cards — used as alternatives to checking accounts or for loading your child’s allowance – are still growing in popularity because of a lingering distrust of big banks.
But the annual cost of a prepaid card can be as high as $360, while the average card charges 10 different fees.
CardHub.com came up with these findings in its 2013 Prepaid Card Report, which evaluates the state of the alternative banking market.
Prepaid card deposits nearly tripled from 2008 to 2012, according to the Mercator Advisory Group, and they are expected to rise an additional 120 percent to $168.4 billion by 2015.
Most consumers will find prepaid cards to be cheaper in 2013 than in years past, CardHub found.
The average cost of a card used as an alternative checking account is down 46 percent compared to 2012. The cost of a card used to load a child’s allowance is down 29 percent. However, cards used as replacement check-0cashing tools are 9 percent more expensive.
“Consumers now have myriad different prepaid card options to choose from, and while the right card can indeed outperform more traditional banking services for certain consumer segments, the wrong one can cost you a great deal in terms of money and functionality,” said Odysseas Papadimitriou, CEO of CardHub.
Here are some more findings from CardHub:
- Prepaid cards from large banks are up to 200% more affordable than those from smaller institutions.
- Celebrity-founded/endorsed cards are 17%-36% more expensive than non-branded prepaid cards.
- As many as 62% of the available prepaid card offers lack the features (e.g. online bill pay, free check loading, etc.) needed to meet basic consumer needs.
Here are the best and worst prepaid cards, according to CardHub:
- The best alternative checking accounts are the Green Dot Gold Visa, the Bluebird Card from Walmart & American Express, and the American Express Serve Card, while the Account Now Visa Classic Card is the worst offer for this purpose.
- The best replacement check cashing tools are the Chase Liquid Card and the PNC Smart Access Prepaid Card, while the Account Now Gold Visa is the worst offer for this purpose.
- The best card for managing a child’s allowance is the KAIKU Visa Card, while the NetSpend MasterCard and ACE Elite Prepaid Visa are the worst offers for this purpose when you opt for their “pay-as-you-go” plans.
- The prepaid card that provides the best access to electronic transactions is the BB&T MoneyAccount Card, while the Green Dot Gold Visa is the worst offer for this purpose.