Saving Money on Prepaid Card Fees

March 10, 2014, Written By Lynn Oldshue

Prepaid debit cards have become incredibly popular, but most people don’t realize how many fees can be associated with these cards. Whether you use prepaid cards as an alternative to a checking account or as a budgeting tool, you can save money by getting the right cards to use. Here, we explain how to save money on prepaid card fees so you can get the most out of your accounts.

Common Prepaid Debit Card Fees

Before making the decision to use a prepaid card, be aware of the different fees you might be charged. These include:

  • Activation fee: This is charged to you when you sign up for your prepaid card. Sometimes it is taken out of your initial deposit, and other times you pay for it separately.
  • Deposit fee: This is charged to your account when you load money onto your prepaid card. Some prepaid card providers will waive the fee for direct deposits.
  • Withdrawal fee: This is obviously a fee that you pay when you withdraw money from your account. This is in addition to the existing ATM fee you have to pay at the machine.
  • Balance inquiry fee: The fee for calling the prepaid card company to check your balance. You will not be charged for checking your balance online.
  • Customer service fee: This is for phone calls you make to your prepaid card provider. It only comes into play for certain phone calls, where the information you ask is readily available for viewing online.
  • Transaction fee: This is a fee charged to your account every time you pay with your prepaid card. Transaction fees were very popular when prepaid cards first came out, but most companies have done away with them.
  • Annual fee: A fee is charged once a year and is automatically deducted from the money in your account.
  • Monthly fee: A fee charged once a month for having the account. It is taken from the balance in your account. If you have no money in the account, the fee will be taken from your next deposit.
  • Cancellation fee: The fee charged to cancel your account. A number of prepaid cards no longer have cancellation fees, but be aware of this potential fee.

You’re going to pay a fee to use your prepaid card. The key is to find the card with the lowest possible fees so you don’t pay more than necessary.

Compare Prepaid Card Fees

If you want to save money in prepaid card fees, you have to compare the cards available to you. All prepaid cards are the same in terms of how they function, but their fee structures are completely different. Ideally, you need to find a card that is going to accurately reflect how you plan to spend money.

If you are going to use your card to make a number of small purchases, you may not want a card with a transaction fee. If you just want to make a large purchase with the card, you may opt for a transaction fee over a monthly fee. If you only want to use the card one time, you might get something with an activation fee and no other subsequent fees.

Avoid These Prepaid Fees

Most prepaid card companies will charge you any time you call customer service to ask a question where the answers are found online. For instance, if you want to know your balance, you can easily check that on the Internet. You could also check details about specific transactions on your account or load money from a bank account or reloadable card. If you learn to use your online account to the fullest extent, you will not have to encounter unnecessary fees.

The deposit method you use may also have an impact on your fees. Let’s say you get charged a fee for bank deposits but you do not get charged to load your card in a store. It may be worth a quick drive to a retail outlet to load your card. Direct deposits are almost always free, but you would need to set up those with your employer. This would save you from cashing your check and then loading the card.

You could also save money by looking for better prepaid cards to use. If you find a card with a better fee structure than your current one, make the switch and enjoy your lower-cost card.

The information contained within this article was accurate as of March 10, 2014. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Lynn Oldshue

Lynn Oldshue has written personal finance stories for for twelve years. She majored in public relations at Mississippi State University.
View all posts by Lynn Oldshue