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June 14, 2011

  • News:  Watch Out For Prepaid Card Fees 

    From 2008 to 2009 prepaid credit cards gained popularity. Use of these cards shot up 61 percent, with more than $120 billion loaded and ready to be spent. The high demand has caused the market to flood with a wide array of offers. The biggest challenge when looking to get the best a prepaid credit card is understanding the fees. Experts say fees vary from one card to the next and the amount of fees charged for any card depends on how the card is used. But there are a few ways consumers can control the fees on just about any prepaid credit card.

    When shopping around, consumers should look for a prepaid credit card that doesn't charge an activation fee. On some cards activation fees can be as much as $20. It's a one-time fee but can be avoided if a free option is available. Secondly, most cards offer free direct deposit of paychecks and government benefit checks. Several prepaid credit cards even offer cash bonuses of as much as $25 when a customer signs up for direct deposit. It's convenient but also helps to eliminate any monthly maintenance fees when a cardholder loads a certain amount on the card each month via direct deposit.

    Purchases with a prepaid card can be processed as either credit or debit and the fees vary between credit and debit. Some prepaid card companies charge the consumer a fee for debit transactions but not for credit transactions. Always choose credit. Likewise, when looking to get cash out of the account, consider that almost all prepaid credit cards charge a fee to withdraw money from an ATM. As an alternative to ATMs, customers can choose to get cash back at grocery stores and other retailers without paying a fee. Finally, watch out for celebrity-endorsed cards. They typically charge exorbitant fees to get a card with the celebrities picture on it.

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