Prepaid cards are reloadable cards that can be used just like checking account-linked debit cards and are becoming the foundation of a second tier banking system used by a growing number of consumers. While prepaid cards are becoming increasingly popular, consumers who use them are subject to multiple and confusing fees and don’t receive the same mandatory consumer protections that apply to traditional debit cards linked to checking accounts.
Prepaid card issuers have responded to criticism about fees by claiming that the cost is comparable to, or even cheaper than, the amount consumers are charged for using a checking account. To find out if this claim is true, Consumers Union compared the fees for checking accounts at the top five banks by asset size and two large credit unions and the fees for 12 of the better known prepaid card programs.
For the full report, go to: http://www.consumersunion.org/pdf/Adding-It-All-Up.pdf