Fees of Prepaid Debit Cards

Understand the fees that prepaid debit cards charge you and learn to choose a card with low fees

Prepaid debit cards differ a lot from regular credit cards. When you apply for a regular unsecured credit card, you have to understand things like apr, grace period, method of balance calculations etc. If you are looking for a prepaid debit card, there are whole set of different things to be aware of. Because prepaid cards do not extend you credit, things like apr and method of balance calculations are irrelevant. But prepaid credit cards have more fees that potential cardholders should be aware of. This article explains what you should be looking for when you apply for a prepaid debit card.

Application Fee - Like most sub-prime credit cards, prepaid debit cards charge an application fee if you apply for a card. The average application fee is $59.95 .

One-time processing fee - Another fanciful term for more fees you have to pay when you apply for a prepaid credit card. The average application fee is $90.00.

Monthly Maintanence Fee - Almost all prepaid debit cards have no annual fee. But they all charge cardholders a monthly fee, just like a bank charging you a monthly fee for a checking account unless you have a certain amount of money deposited. This normally ranges anywhere from as low as $4.00 to $9.00 a month. So though there is no annual fee, I would consider the monthly maintanence fees as annual fee.

Fees for Loading Card - As prepaid credit cards are not credit cards, you have to load the card from either your bank account, an employer's direct deposit or other means. Most prepaid debit cards charge a transaction fee for these transfers, usually about $1.00 per transfer.There are some cards that do not charge these fees.

• Payroll Direct Deposit Fee

• Money Order/Cashiers Check Deposit Fee

• ACH Direct Deposit Fee

• Online Fund Transfer Fee

• Bank Transfer Fee

• Card to Card Reload Fee

• Western Union Transfer Fee

• MoneyGram Transfer Fee

Purchase Transaction Fees - Some prepaid debit cards charge cardholders a fee ranging from $0.50 to $1.00 for every purchase one makes on the card. This can be very costly. Read the terms and conditions carefully. Some will charge no transaction fee as long as the transaction is signature based (which means you enter "credit" in the processing machine and sign the receipt like you would a normal credit card rather than using the "debit" function and keying in a pin-based four digit number code).

Customer Serivce Fee - While phone customer service is free for all regular credit cards, many prepaid credit card issuers charge a fee when you call customer service. This is what you may expect to see in the terms and conditions. This can range from $2.00 to $3.00 per call. (Just goes to show how costly running a call-center can be!)

Paper Statement Fee - Prepaid debit cards do not send cardholders any paper statements. They are all electronic. To receive a paper statement, you will have to pay anywhere from $1.00 to $5.00.

Card Replacement Fee - When you have a regular credit card and you lose it, all you have to do is to call the credit card company and they will send you a replacement card for free. With prepaid cards, you will be charged a fee ranging anywhere from $5.00 to $25.00. Be very careful not to lose your card.

Companion Card Fee - While regular credit cards allow you to have a companion credit card for free, most prepaid credit cards charge a fee, usually about $5.00.

So should you get a prepaid debit card?

After looking at the fees most prepaid credit cards charge, you might wonder if it is a good idea to get one. In you have bad credit, no credit, or have just been discharged from bankruptcy and are looking to rebuild your credit, you should first get a secured credit card. Most people should be able to get one.

However, there may be those that want a prepaid debit card to help maintain spending discipline (because you cannot spend more than the amount you load into the card). Or some people may not be bothered about building a credit history via credit card, or you have no bank account and just want a simple prepaid Visa or Mastercard.

If you are looking for a prepaid debit card, you should study the terms and conditions carefully, using this article as a guide as to what to look out for. Find the card which has the lowest fees.