Prepaid debit cards could present hidden costs

Michael Feight almost always uses his Green Dot prepaid card.

“It’s convenient. It’s accepted everywhere Visa is accepted,” Feight said.

Feight is very careful of how he uses the card. He says he is able to avoid most fees.

Prepaid debit cards do not come free. A Consumer Reports investigation looked at different cards and found that fees can be a big problem.

“You can be charged an activation fee, a ‘swipe fee’ every time the card is used, a monthly maintenance fee and even a ‘dormancy’ fee for not using the card often enough,” Margot Gilman of Consumer Reports said.

Consumer Reports found that some of the highest fees are on the AccountNow Gold Visa prepaid card.

It charges $9.95 a month, as much as $4.95 to load money onto the card, and $2.50 for every ATM withdrawal.

The NetSpend Pay as You Go card charges every time it is used.

“For a daily user of the NetSpend Pay as You Go card, the ‘swipe’ fees could add up to hundreds of dollars a year,” Gilman said.

The worst card in the Consumer Reports investigation was the American Express for Target.

“You can only reload it at a Target store unless you have a bank account or direct deposit,” Gilman said. “To get cash from an ATM almost always incurs a fee. And the card isn’t FDIC insured,” she added.

Consumer Reports did find cards that offered good value and online convenience to customers.

They include the Emerald Card form H&R Block, the Bluebird Card with direct deposit and the Green Dot Card.

As Feight has found, almost all fees can be avoided if your use the card 30 times a month and reload with direct deposit.

With most prepaid debit cards, figuring out the fees can be tough. Always read the fine print carefully.

Also be aware prepaid cards are not protected by law against loss or theft. Most issuers have voluntary protections in place.