Report: Fees Still Prevalent On Prepaid Cards

Prepaid debit cards can be a viable alternative for underbanked and unbanked consumers, but while newer prepaid cards from JPMorgan Chase and American Express feature more transparent pricing than many older existing providers, “the recent arrivals have yet to make a major impact on the overall prepaid market’s pricing structure,” American Banker noted.

Bankrate’s 2013 Prepaid Debit Cards Survey compared 24 prepaid cards based on the fees they charge consumers and the results are not much different from the company’s 2012 prepaid survey.

“The biggest development in the prepaid card market over the past year was the entry of several large national and regional banks,” said Greg McBride, CFA, senior financial analyst for Bankrate.com. “Many offer cards with low, fixed monthly costs. The ability to know the total monthly cost in advance is valuable to consumers, particularly with the decline in free checking accounts.” Bankrate has previously reported that 72 percent of credit unions and 39 percent of banks offer standalone free checking accounts.

Survey findings included:

Monthly Service Fees

  • Fifteen of the 24 cards (63 percent) charge a monthly service fee ranging from  $3.00 to $9.95. 
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  • Eight of the 15 cards that charge a monthly service fee offer a fee waiver or reduction, which is usually based upon how much money is automatically loaded onto the card. 
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  • In total, two-thirds of the cards that Bankrate surveyed either have no monthly fee or offer a fee waiver.
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Activation Fees

  • Two-thirds of the cards are free of activation fees if purchased online. Fifty-four percent can be purchased in-person without an activation fee. 
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  • The activation fees range from  $2.99 to $14.95.
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Reload Fees

  • None of the issuers that Bankrate surveyed charge reload fees.
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ATM Withdrawal Fees

  • All 24 cards charge a fee to withdraw money from another institution’s ATM; the fee ranges from $1.50 to $2.75 per transaction. 
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  • Fifteen of the 24 cards have their own ATM networks. Ten of those 15 (67 percent) charge a withdrawal fee to in-network consumers that ranges from $1.50 to $2.75.
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ATM Balance Inquiry Fees

  • Thirteen of the 24 cards (54 percent) charge an ATM balance inquiry fee ranging from $0.45 to $1.00 regardless of which network the ATM belongs to. 
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  • Of the remaining 11 cards, five charge balance inquiry fees only at some ATMs, four do not charge at all and the other two do not permit ATM balance inquiries.
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PIN/Signature Point-of-Sale Fees 

  • Seventy-one percent (17 of 24 cards) do not charge for PIN-based point-of-sale transactions. Two cards do not permit PIN-based point-of-sale transactions. Among the five cards that charge this fee, it ranges from  $0.49 to $2.00. 
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  • Eighty-three percent (20 of 24) do not charge a signature-based point-of-sale fee. Among the four cards that charge this fee, the fee is either  $0.95 or $1.00.
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Monthly Statement Fees

  • Fourteen of the 24 cards (58 percent) charge a monthly fee ranging from  $1.00 to $5.95 for statements by mail. Thirty-three percent do not charge this fee and eight percent do not offer statements by mail. None of the 24 cards offer a statement that can be printed at an ATM.
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Read the full report here