You see them advertised all the time on TV, prepaid debit cards have transitioned from an unattractive financial product to a product endorsed by some of the most popular celebrities.
Originally, prepaid debit cards were designed for people who do not trust banks and cannot afford to keep minimum balances in their account. The prepaid method allows people to hold different balances and “avoid monthly fees,” since some banks charge $15 just for a checking account, and that doesn’t include if you accidently overdraft.
Well when you put it that way, prepaid sounds like the way to go. This method allows you to separate yourself from “untrustworthy” financial institutions and avoid fees. Your favorite celebrity endorses it, so it has to be great, right? Nah, there’s always a catch.
Upon examination of one particular celebrity-endorsed prepaid debit card, it was found this convenient card was not so convenient after all. The card itself cost anywhere from $4.00 to $15.00 because customers are forced to select a snazzy design. Additionally, monthly fees range from $6.00 to $10.00 depending on whether the plan is unlimited or month-to-month. Transaction fees can cost a user up to $10 a month or $1.00 for every pin-based transaction, again, depending on the plan. After searching the web for reviews on the card, many complaint boards were found, with the most frequent complaints being poor customer service and ATM’s not dispensing cash. When other celebrity-endorsed prepaid cards were studied, many of the same fees applied, and more, with one card charging $5.00 to put money on the card and $1.00 to receive a statement.
It could be worse, and in ways this is no different than some banks. But here’s the biggest problem: in many cases, your funds aren’t insured. If your money is lost, it’s lost for good.
For these reasons, prepaid debit cards make a good checking account alertnative, only. When you’re trying to choose the best option for you, weigh out the pros and cons. If you are trying to build credit, but have a less-than-perfect history, check out a credit union. Many offer checking accounts for this specific reason and the accounts typically have fees that decrease over time. Keep in mind, the checking accounts may not come with fancy debit card designs and a celebrity spokesperson, but it may be easier on your pocket in the long run.
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Categories: Credit, Finances