Survey finds wide variance in prepaid fees

In a survey of 24 prepaid cards, banking product comparison site Bankrate.com said fees vary widely by card and by how consumers use the cards. The survey found that the amount of fees cardholders pay is related to how often the cards are used. Bankrate said two-thirds of the cards surveyed either charged no monthly fee or offered a fee waiver, which is typically contingent on how much money is automatically loaded onto particular cards.

But Greg McBride, Certified Financial Advisor and Senior Financial Analyst at Bankrate, said that the ability for cardholders to know the costs of the cards upfront is a beneficial feature. Many financial institutions offer "cards with low, fixed monthly costs," he said. "The ability to know the total monthly cost in advance is valuable to consumers, particularly with the decline in free checking accounts."

Following are highlights from Bankrate's survey:

• Monthly service fees: Fifteen of the 24 cards surveyed charge a monthly service fee ranging from $3.00 to $9.95. But eight of those 15 cards offer a fee waiver or reduction usually based upon how much money is automatically loaded onto the cards.

• Activation fees: Activation fees ranged from $2.99 to $14.95, but two-thirds of the cards come without activation charges if the cards are purchased online. Meanwhile, 54 percent of the cards can be purchased in-person without having to pay an activation fee.

• Reload fees: None of the surveyed cards charge reload fees.

• ATM withdrawal fees: All 24 of the cards surveyed charge a fee to withdraw money from out-of-network ATMs; with fees ranging from $1.50 to $2.75 per transaction. However, 15 of the 24 cards are linked to in-network ATMs, with 10 of those 15 issuers charging a withdrawal fee for in-network transactions of between $1.50 to $2.75.

• ATM balance inquiry fees: Thirteen of the cards charge ATM balance inquiry fees ranging from $0.45 to $1.00, regardless of whether the transactions occur at in-network or out-of-network ATMs.

• Monthly statement fees: Fourteen of the cards charge a monthly statement fee of between $1.00 to $5.95 for paper statements, while 33 percent do not charge the fee and 8 percent do not offer statements by mail.

• Bill payment fees: Twenty-two of the cards do not charge bill payment fees.

• Customer service fees: Only four of the cards charge for customer service calls, with $2.00 the most common fee, while the other 20 cards provide at least one free call per month and two-thirds of those 20 cards never charge for telephone customer service.

• Declined transaction fees: Fifteen of the cards do not charge for declined transactions, while five charge between $0.25 and $1.95 for each declined transaction and another four charge either $1.00 or $2.00 only for transactions declined at ATMs

• Inactivity fees: Seventeen of the cards do not charge an inactivity fee, but the accounts may be closed after three to six months of inactivity. The remaining cards charge a monthly inactivity fee ranging from $1.95 to $5.95, which typically is not charged until at least 90 days have passed where cards remain inactive.

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