Prepaid debit cards often have hefty fees
Category: News and Notes- fhuff- 4:13 pm/ January 20, 2011Prepaid debit cards offer convenience, but you may have to pay a lot of fees to use them. Unlike debt cards that are linked to a savings or checking account, prepaid debit cards can require activation or monthly fees. They can also charge a fee each time you make a transaction or add additional funds.
Despite the fees, prepaid debit cards have won over more consumers looking for a way to avoid check cashing stores, pawn shops, liquor stores, or other businesses that charge to cash checks. A 2009 Federal Deposit Insurance Corp. study found that about 7.7 percent of American households (17 million adults) were unbanked, which means they do not have checking or savings accounts.
If you decide to get a prepaid debit card, shop around to compare deals. Among the fees you should ask about are those for using customer service, withdrawing money at an ATM, balance inquiries and monthly service. You may even have to pay a fee if you spend more than the balance available.
Prepaid debit cards can be a useful financial tool if used wisely. But not all cards are made the same, and having a celebrity endorser is not a guarantee that you are getting a good deal.
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