The right way to use prepaid cards
There are ways to reduce the fees you'll have to pay when you use one of these cards.
This post comes from Jeanine Skowronski at partner site MainStreet.
Prepaid debit cards are widely criticized for charging high fees and offering few incentives to consumers. The criticism, in many instances, isn't unwarranted. A study conducted by credit card ranking site NerdWallet found that some prepaid products can cost users up to $300 a year.
Still, they remain popular among the unbanked and those who have poor credit. Here are a few ways those using a prepaid card can minimize the fee damage:
Set up direct deposit. A growing number of products will waive certain fees or charge lower ones if a person's paycheck is being deposited onto the card. Wal-Mart, for instance, waives the $3 reloading fee associated with its MoneyCard, and Western Union waives the $4.95 fee tacked onto its prepaid Visa when direct deposit is set up. Post continues below.
Replenish declining balances. Other issuers will let you bypass fees if you load a certain amount of money onto the card in a 30-day period (which can be achieved by using direct deposit). For example, Mango Money's Prepaid MasterCard credits users their $5 maintenance fee if they load at least $500 onto the card during that period, and Capital One waives its $4.95 fee for the same reason.
Only use ATMs in your network. Similar to banks furnishing traditional checking accounts, some prepaid issuers waive ATM fees if you use machines in the networks they partner with. Green Dot, for instance, doesn't charge when its cardholders use MoneyPass ATMs to withdraw their money. Out-of-network withdrawals cost $2.95. Suze Orman's Approved Card doesn't carry a fee when cardholders use AllPoint ATMs to withdraw their money, as long as the cardholder has directly deposited $20 onto the card in the past 30 days.
Go green. Paper statements, by and large, are going to cost you, while you can see them for free online. Additionally, some issuers won't charge when you make payments electronically. Capital One's prepaid card, for instance, charges 95 cents to pay bills by paper, but doesn't charge a dime when you pay electronically.
More on MainStreet and MSN Money:
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
ABOUT SMART SPENDING
LATEST BLOG POSTS
When it comes to dealing with debt and clearing your credit, what you don't know really can hurt you.