Tuesday, May 28, 2013
Report sums up prepaid with 'buyer beware'
Financial services comparison site Bankrate.com issued its annual survey of prepaid cards and concluded that, despite a positive trend of decreasing fees, it still can be a perilous, fee-laden market for consumers. Bankrate.com examined 24 of the most prominent prepaid cards to discover "the usual menu of fees – and some very unusual price differentials, underscoring the 'buyer beware' nature of the prepaid market."
Based on a survey of prepaid card issuers conducted in mid-February 2013, the comparison site found that:
- Fifteen of the 24 cards (63 percent) charge a monthly service fee ranging from $3 to $9.95
- Two-thirds of the cards are free of activation fees if purchased online, while 54 percent of the cards can be purchased in-person without an activation fee
- None of the issuers charged reload fees
- All 24 cards charged a fee to withdraw money from out-of-network ATMs, with fees ranging from $1.50 to $2.75 per transaction
- Thirteen of the cards (54 percent) charge an ATM balance inquiry fee ranging from 45 cents to $1, regardless of which network the ATM belongs to
- Seventeen of the cards (71 percent) do not charge for PIN-based POS transactions
- Fourteen of the cards (58 percent) charge a monthly fee ranging from $1 to $5.95 for statements by mail
- Twenty-two of the cards do not charge a bill payment fee
- Only four of the cards charge for all customer service calls, with $2 being the most common fee, while most of the others provide at least one free call per month
- Fifteen of the cards do not charge for declined transactions
- Only seven of the cards (29 percent) charge monthly inactivity fees, with fees ranging from $1.95 to $5.95; the other cards do not charge the fee but may close the card after three to six months of inactivity
Bankrate.com Senior Financial Analyst Greg McBride said the most significant development in the prepaid card industry over the past year was the entry of several large national and regional banks, which he sees as a positive trend. "Many 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."
Editorial Note:
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