Should You Fear Prepaid Debit Card Fees?

One of the knocks against using prepaid debit cards (AKA stored value cards) has been that these cards charge prepaid debit card fees. Well, yes, they do charge fees, just as any other business trying to turn a profit will charge you for its goods and services. And these fees usually compare extremely well with the comparable kinds of charges a person would incur on a credit card. But it’s not the fact that prepaid card companies charge for their services that’s important to understand, rather it’s how much they charge and for what particular services they charge for that’s important. Understanding that can help you make an informed decision about which prepaid card to buy and use. So let’s take a look at the 3 most common debit card fees.

First, there’s the card’s purchase fee

Unlike credit cards which banks are happy to ship to you for free, you must buy prepaid debit cards before you can use them. This is happily a one-time fee so the cost is negligible. Still, different prepaid debit cards will cost you different amounts up front. They range from as low as $3.00 to as high as $9.95.

Second, there’s the money loading fee

Also known as a reloading fee, this fee is something you incur every time you add money to the prepaid card. These fees usually range from $3.00 up to $6.00 but the good news here is that they can often be avoided is you load the card via a direct deposit. This is simply an automatic deposit from a paycheck or government check that you set up to go directly to your card. Most prepaid companies will waive the fee when you use this form of reload.

Third, there’s the monthly maintenance fee

Every prepaid card I’ve seen charges this type of fee. Some call it a service fee or a premium plan but no matter the name, it is simply the price you pay to keep your account open and active each month. Again, the amount of the fee varies between debit cards and can run between $3.00 and $9.95. The good news here is that some companies are actually waiving this fee if your card usage is high enough (i.e. if you make a certain number of purchases or reload a certain amount each month).

Are there other fees?

You bet there are. Companies will charge you ATM fees or balance inquiry fees or cash back fees but these are usually pretty small in comparison to the “big 3” above. One thing that holds true is that the companies that charge you the lower purchase, reloading, and maintenance fees usually also charge you less for all the other extra fees you might run into. In the end, if you understand prepaid debit card fees and shop around a bit, you can find some pretty inexpensive debit cards.

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