Often marketed to underbanked consumers, prepaid credit and debit cards haven’t been as thoroughly regulated as other traditional financial products.That’s left much of the market free to riddle their cards with fees upon fees, but a new report by CardHub.com shows there are some diamonds in the rough.
“The prepaid card industry is difficult to navigate for two reasons: Most consumers are new to it and there are a multitude of different fees that prepaid card issuers have been known to charge,” says Odysseas Papadimitriou, founder and CEO of CardHub.
After poring over a slew of prepaid cards, CardHub ranked the best and the worst of the bunch based on fees and usability.
The Suze Orman Prepaid Card and the Chase Liquid Card were distinguished as a couple of the best cards based on their usability and fee schedule. On the other hand, the AccountNow Visa Classic and the Original Rush Card were found to be some of the worst options––AccountNow charges a $1 surcharge on every purchase and $2.50 on ATM fees, and the Rush Card pops users with either a $5.95 or $9.95 monthly fee depending on which plan you choose*.
Check out the full list here. Before you snap one up for yourself, here’s how to know when you’ve found the right prepaid card for your needs:
Know how you’ll use it: By figuring out your exact needs for a prepaid card, you’ll have a better chance at finding the right fit for you. For example, for a checking account replacement, you’ll want minimal fees for ATM transactions and the ability to direct deposit your checks into your account as well as pay bills online.
Steer clear of fees: Prepaid debit cards are known for their fees, which include ATM withdrawals and reloading charges. Nobody likes to read a Disclosure form or a fee schedule, especially since banks have a tendency to be a little wordy with them. However, if you don’t spend the time to go through them you are bound to get hit with an unexpected fee later on.
A spokesperson for the Rush Card reached out to BI to refute Card Hub’s claims. Here’s how they define their fees:
- The $9.95 monthly fee you mention is an option offered by RushCard, but it is not the cheapest plan available. RushCard offers a lower priced $5.95 plan with direct deposit called RushUnlimited, featuring unlimited PIN and signature transactions.
- Under that $9.95 monthly plan, users are entitled to two free ATM withdrawals per month
DISCLAIMER from CardHub.com, http://www.cardhub.com/edu/prepaid-cards-report-2012/
Worst* Card For Alternative Check Cashing Tool: Original RushCard – Monthly Plan
*Only two cards met the criteria of an alternative checking account, and though this resulted in one card being labelled the “best” and the other the “worst” with no intermediate ground, both cards must be given credit relative to the cards that did not qualify due to their lack of requisite features and services..