What: So, you’re about to check out at the grocery store, and a $50 prepaid visa card catches your eye. That would make a great Christmas gift for someone! Or perhaps you’re into DIY banking, or have horrible credit, and need some kind of plastic to get by. If you end up buying that prepaid debit card, you’re like millions of other Americans. And if you’re not careful, you could get screwed over with hidden fees like millions of other Americans. You name it, they’ll charge you for it. Monthly maintenance fee. Ouch. ATM balance inquiry fee. Ouch again. Inactivity fee. Are you kidding?
What They Say: From the New York Times:
Like many workers, Tyrell Blocker, 20, of Brooklyn, could ill afford the surprise when he took such a card last week to a Pay-O-Matic Financial Services store in Manhattan after a bank turned him down for an account because he lacked one of two required pieces of identification. As soon as the cash from his paycheck landed on his card, he noticed fees accumulating. Mr. Blocker returned to Pay-O-Matic to complain and only then was provided a detailed list of more than two dozen fees, he said.
What We Say: This is just sooooo disappointing. We’ve been big fans of pre-paid debit cards as a way to manage your expenditures and to teach kids how to use credit responsibly and now this. While banks and credit card companies are notorious for nickeling-and-diming customers, it’s much easier to hide fees from shoppers via preloaded debit cards. If, however, you play your prepaid card right, you can save a little money over traditional banking. But only if you’re really on top of it. When in doubt, pay with cash or check. Stores still accept paper, we promise!