The Pitfalls of Prepaid Cards

It’s not easy being a credit-card customer — especially during the past six months or so. Not surprisingly, consumers are starting to look for spending alternatives. They’re turning to cash, they’re turning to debit, and, in some cases, they’re turning to prepaid cards. If you’re thinking about using a prepaid card, make sure you understand the costs associated with doing so, though. From SmartMoney:Fees, fees and more feesPrepaid cards may not come with the sky high late-payment fees or APRs of traditional credit cards, but they do carry a slew of other charges. “[Prepaid card issuers are] pretty creative with coming up with random fees,” says Curtis Arnold, founder of credit-card information site CardRatings.com. Cardholders can get hit with a fee when they activate their card, call customer support, withdraw money from an ATM, refill their card or order a replacement card.To activate Visa’s prepaid RushCard, issued by Manufacturers and Traders Trust Company, for example, you’ll have to shell out $19.95. Lose your Green Dot MasterCard or Visa issued by Columbus Bank & Trust? That will be $10 to replace it. And if you want to put more money into your Account Now Visa card issued by Palm Desert National Bank, well, that will cost you $4.95.“We encourage consumers to compare [these cards]. Read exactly how the fees work, and find a card that suits your specific needs,” says Jennifer Tramontana, spokeswoman for the Network Branded Prepaid Card Association, an industry trade group. (See our table for some of the better prepaid card deals currently being offered).