Shopping for a Prepaid Card? Here Are 5 Things to Look Out For

Credit cards have become a very essential part of today’s world. While it’s not absolutely necessary to own a credit card, almost everyone still needs some type of plastic in order to make online purchases, book travel arrangements, build credit, and navigate numerous other financial situations.

Unfortunately, many people can’t qualify for a traditional credit card or open a bank account because of poor credit history, and many others simply don’t want a credit card, period. That’s where prepaid cards come in. Prepaid credit cards don’t carry interest rates like credit cards do, but they do often carry a number of other fees. Not all prepaid cards are created equal, however, so if you’re thinking about signing up for one, you should make sure you read the fine print before you do. There’s no such thing as a free lunch, so don’t expect to sign up for any free prepaid cards, but if you know what you’re looking for you can definitely get a prepaid card on the cheap.

Here are five things to look out for when shopping for a prepaid card:

1. Monthly fees. Prepaid cards charge a monthly service fee of between $0 and $9.95 per month. Monthly fees are the least harmful type of fee you will encounter when shopping for a prepaid card. While paying any sort of fee is always annoying, with a monthly fee you know that it’s going to be the same amount per month, and you won’t face any surprises. There are even certain cards out there that charge no monthly fee like the American Express Prepaid Card, but make up for it by charging other types of fees elsewhere.
2. Transaction fees. The majority of prepaid cards charge cardholders per transaction in the form of a transaction fee of up to $0.40 per transaction. If you don’t plan on using the card often, then a transaction fee is not a bad fee to have whatsoever. However, if you plan on using the card daily for most of your purchases, then a prepaid card with a high transaction fee is not the card for you. An example of a card that does not charge a transaction fee is the US Bank Convenient Cash Card.
3. Deposit fees. The majority of prepaid cards also charge cardholders when they make a deposit into the card account. However, many cards also allow for one or two free deposits per month. If you budget your card’s funds responsibly, you can get away with making one free deposit to the card per month.
4. Cash withdrawals. Not all prepaid cards allow the cardholder to make ATM withdrawals. If you believe you will need to make ATM withdrawals using your prepaid card, then make sure to select a card that allows ATM withdrawals. However, keep in mind that many cards will charge an ATM withdrawal fee, in addition to the fee charged by the ATM if it’s out of network. If you plan on making a lot of cash withdrawals from an ATM, be sure to choose a card with little to no withdrawal fees such as the Chase Liquid Card, which offers free withdrawals from any Chase Bank ATM.
5. Money accessibility.  Some prepaid cards put a hold on the funds you deposit for up to ten days. If being able to use your card directly after you deposit money is important to you, look for a card that offers access to your money soon after you deposit it, or you may be stuck waiting.