As Prepaid Usage Grows, So Must Consumer Awareness

There are plenty of reasons for consumers to turn to prepaid cards right now, and they’re doing so in record numbers.

A recent Pew survey has concluded that prepaid accounts are worth about 600 percent more than they were just three years ago, and the reasons for their popularity are many.

For one, the economy is still down, preventing many consumers from accessing traditional credit and debit cards. Secondly, fees for traditional accounts are soaring, thanks in part to what many believe are deficiencies in the Durbin Amendment. And perhaps most simply, prepaid accounts are simply cheaper for most than their checking counterparts.

So what should you know if you’re considering making the prepaid jump? One article on TheStreet provides what we think some great starter tips for anyone who’s considering opening a prepaid account.

Avoiding Fees
TheStreet notes that you’ll probably have to bite the bullet on ATM fees, but there are plenty of other charges you can avoid by picking the right card. One piece of advice we love? Ask for a complete list of fees before you sign any contracts, and watch out for overdraft, monthly, and usage fees. Some prepaid cards will waive ATM fees as well, such as those from Green Dot, so make sure you shop around.

Cards With Benefits
As the prepaid industry expands, so too will prepaid rewards offerings. That’s a prescient observation, and one TheStreet uses to remind consumers to be on the lookout for such programs. Cash back rewards can be especially useful for prepaid accounts, for reasons that are fairly self-evident.

Storage Capacity
The article makes a strong point here in that for most people, there’s little use in a card that has a max balance in the low hundreds. Perspective prepaid clients should shoot for cards with balances in the thousands: this will let you make bigger transactions more frequently, and help you avoid reload fees.

Fraud Liability
The article notes that your card provider should offer the same fraud protection for prepaid as it does for debit. If it doesn’t look out – prepaid cards don’t face the same regulatory standards as debit and checking cards, so make protection a priority.

What do you think of the advice offered above? What would you add to the list? Tell us in the comments below.

And to read the complete TheStreet story, click here.