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There are so many different types of prepaid cards on the market that you have to be smart in comparing fees. Typically prepaid cards will charge fees for some or all of the following:

  • Start-up fee
  • Annual fee
  • Monthly fee
  • ATM fees (every time you use an ATM)
  • Point-of-sale fee (each time you make a purchase)
  • Reload fees
  • Inactivity or dormancy fees.

The following table gives median fees for prepaid cards in 2004

Fees to look out forMedian Fees
Entrance Fee$19.97
Shipping Fee $9.97
Annual Fee$49.97
Monthly Fee$4.97
ATM Fee$2.47
POS Fee$1.00

Source: Stored Value Cards: A Scan of Current Trends and Future Opportunities, Center for Financial Service Innovation, July 2004

Protect your money

It is important to know what protections your prepaid card offers. The most important protections are:

  • Federal Deposit Insurance on your card. This protects your money in case the provider of the card faces financial difficulties. Some prepaid debit cards are linked to bank accounts, which give you federal insurance on your deposits.
  • Transaction records. It is often helpful to have records of transactions made on the card. This way you can keep track of your spending and watch for any unauthorized transaction (for example if you lose the card).

Beginning in July 2007 all payroll cards (any some other prepaid cards) will likely have to provide statements of transactions on each card. These protections will not likely extend to cards like the gift cards where money is stored on a card for use at specific retailers.

Savings options

Some prepaid cards help you save. For example, a “round-up” card allows users to round-up each time they make a purchase, and the change goes into their savings accounts. The savings are matched on a 1:1 basis up to a certain amount as an incentive for people to save. Ask for savings options for your debit card!