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Prepaid Card Survey: Convenience at a cost

By Alegra Howard

Marketed as a convenient way for consumers to manage money and control spending, and as a checking account substitute, prepaid cards are the financial tool of the hour. Even big-name institutions and celebrities are getting in on the act.

Consumer Action took a look at the marketplace and collected our findings in a new Prepaid Card Survey that examines 28 cards from 11 issuers.

All surveyed cards are available nationwide, except American Express prepaid cards (not sold in Arkansas and Vermont) and Green Dot cards (not sold in Vermont).

Our surveyors compared the costs to buy, deposit funds (load) and use the cards.


Consumer Action found that cards come with many types of fees, for ATM cash withdrawal, balance inquiries, customer service calls, monthly maintenance, reloading funds, transactions and attempting to make a purchase without adequate funds.

The fees for each card varied greatly. Some cards will waive a fee if you load a certain amount of money on the card each month or register for direct deposit of salary or income.

Among surveyed cards, American Express cards had some of the fewest fees but no card was free. See: Tale of two cards

None of the surveyed cards required the cardholder to have a bank account or undergo a credit check.

The funds on all surveyed cards were FDIC insured for up to $250,000 per account, except for those issued by American Express, which are covered by state transmitter laws. All surveyed cards offered voluntary fraud protection and error resolution coverage.

Most cards surveyed allow cardholders to monitor accounts online for free, view balances, set up email and text alerts, even pay bills and schedule balance transfers to the card. Fees generally apply for the bill payment feature.

Reloading fees can often be avoided by using direct deposit or funds transferred from a bank account.

Steer clear of balance inquiry fees by checking your balance with a call to customer service, when free, or by checking your account online or scheduling email or text alerts.

Some card issuers offer the option to text for immediate free balance inquiries (but remember your cell phone carrier may charge you to receive text messages).

Avoid ATM withdrawal fees by getting cash back at a retailer when you make a purchase using your PIN.

Monthly maintenance fees. Of the 28 cards surveyed, 20 had monthly maintenance fees. The highest was READYdebit Visa Prepaid Platinum at $14.95 a month. Eight cards had no monthly fee (cards from American Express, H&R Block, OneWest, Western Union, and RushCard Pay-As-You-Go). Some cards will waive their monthly maintenance fee when cardholders meet certain criteria. For example:

  • Bank Freedom, Capital One, Mango and Regions Bank waive monthly fees when you load $500 or more per month.
  • Green Dot cards waive the $5.95 fee if you make at least 30 purchases or load at least $1,000 onto your account each month.
  • READYdebit Visa Control waives the $3.95 monthly fee when at least $1,500 in direct deposits are loaded per month.

Reload fees. Many cards allow free reloads online, by phone or from a bank account, debit or credit card, or when you cash a check and have the cash placed on your card (although check cashing fees may apply).

Others charge reload fees in specific circumstances, such as in-store or when you use a teller at a bank branch. For example, Western Union storefronts charge $4.95 for cash reloads on the company’s Prepaid Visa and mun2 cards. On the American Express for Target Prepaid Card, you pay $3 for cash, credit card and debit card reloads at Target stores. Regions Now Visa Prepaid Card (Regions Bank) charges $3 for in-branch reloads using a teller.

To reload cash on most cards, you have to pay the cash to a third party, which will charge you to convert your money into electronic funds that you can load on the card. (These are called third-party reload fees.)

Even many issuers with no online or phone reload fees allow you to reload money through a third-party cash conversion service like Green Dot’s MoneyPak. For $4.95 per cash reload, you can transfer the MoneyPak balance to many of the surveyed cards.

Many cards have daily reload restrictions as well as load caps. Load caps are the maximum amount that can be on the card at any one time.

Purchase transaction fees. Six of the 28 cards surveyed charge transaction fees when you use the card to make

a purchase using your signature or PIN. (Like debit cards, many prepaid cards give you the option to sign for a purchase or enter your PIN.) In general, prepaid PIN transactions tend to cost more on cards that charge per-transaction fees and that allow you to choose between signature and PIN.

Fees ranged from 25¢ per transaction (Jackson Hewitt’s Smartcard with PIN) to $2 per transaction (NetSpend’s Pay-As-You-Go plan, which charges $1 per signature purchase and $2 for PIN transactions). The RushCard Pay-As-You-Go charges $1 for each PIN and signature purchase transaction, but caps transaction fees at $10 a month. (Any transaction charges in excess of $10 are refunded to your RushCard the following month.)

Some cards cap daily purchases. Examples inlcude a $2,000 daily purchase limit on the Bank Freedom Prepaid MasterCard, and AccountNow Prepaid Visa Classic’s $2,000 daily purchase limits on PIN and signature transactions.

ATM withdrawal fees. Many of the prepaid cards offer in-network ATMs where you can withdraw cash for free.

However, out-of-network ATM fees range from $1.95 per withdrawal on many surveyed cards to $3 (American Express for Target).

Modern Cash and Green Dot cards have a $2.50 out-of-network ATM fee. In addition, some ATMs owners will hit you with a second withdrawal fee.

Most cards have caps on how much cash you can withdraw at ATMs—these caps can be daily or weekly. For instance American Express Prepaid limits cash withdrawals to $200 per week.

Surveyed cards that offered cash back at in-network ATMs include Green Dot, Modern Cash, OneWest, Regions Bank, Univision and Walmart. (But ATM owner fees may still apply.)

Many cards also offer the option of receiving cash back for free when you make purchases with a PIN at grocery stores, other retailers and post offices. But in this instance, beware of cards with PIN purchase transaction fees like the AccountNow Visa Classic, READYdebit Visa Control and RushCards.

Inactivity fees. H&R Block, after three consecutive months with no card activity, charges a fee of $2.50 in each subsequent month the card is not used. Western Union prepaid and Western Union mun2 cards also charge a $2.50 monthly inactivity fee, after 12 months of inactivity.

Decline fees. When you attempt to withdraw cash or make a purchase with insufficient funds on your card, you could get hit with a declined transaction fee. Seven surveyed cards had them: 40¢ for ATM declines (AccountNow), 45¢ (mun2), 50¢ (Bank Freedom) and $1 (PayPal).

READYdebit’s Control Prepaid card charges $1.95 per declined purchase transaction (signature and PIN). Modern Cash charges a 50¢ ATM decline fee and a $14.95 insufficient funds fee for each transaction that causes the available balance on your card to go into negative territory. Modern Cash also charges a $9.95 overdraft fee if you ask the issuer to cover any transactions you make that exceed your current balance, up to $100.

Customer service fees. Ten surveyed cards charged cardholders for speaking with a live agent over the phone. Fees started at 50¢ (NetSpend) with six cards charging $2 per call (Jackson Hewitt, OneWest, READYdebit’s Control and Select cards, Regions Bank, and Suze Orman’s Approved Card).

Jackson Hewitt offers two free calls a month before it charges. OneWest, READYdebit’s Select card, Regions Bank and the Approved Card all offer one free call per month. AccountNow will waive its $1 fee with direct deposit.

AccountNow and NetSpend also charge 50¢ for automated customer service phone calls—even when there’s no live representative.

Foreign transaction fees. Foreign transaction fees ranged from free (the Approved Card and American Express cards) to 3.5% of each international transaction (PIN and signature purchases) for NetSpend. That’s $3.50 for every $100 you spend on overseas purchases.

RushCard Pay-As-You-Go charges a 2% foreign transaction fee, plus a $2 convenience fee for each signature and PIN purchase transaction you make outside of the United States.

About the survey

Consumer Action’s 2012 Prepaid Card Survey was conducted Jan. 16-March 22 by Alegra Howard. The survey was coordinated by Ruth Susswein. Find additional details about these cards at Consumer Action Prepaid Card Survey (PDF) .

Note: You are prohibited from using Consumer Action’s name or any reference to its surveys in advertising or for any other commercial purpose.

Send any comments about this survey to .(JavaScript must be enabled to view this email address) .

Prepaid fees at a glance

Here’s a quick overview of our findings on some typical fees. Download our detailed chart containing all card costs, terms and contact information at Consumer Action Prepaid Card Survey (PDF) .

28 cards were in the survey


Category: Payday loans

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