Learn What to Know Before Choosing a Prepaid Card

Fees for purchase and activation (first load):

These one-time costs can range from $0 to $30 or more when you first obtain the card. Many cards do not carry an activation cost, and you can locate cards without a purchasing fee, particularly online. However, be wary of cards that compensate for low or no fees by charging hefty monthly service or transaction costs when you use the card to make purchases.


Reloading fee: 

The fee for adding funds to a card account can range from $0 to $5 or more per reload. Some of the difference is due to the source of the cash. For example, there may be a fee for loading funds from a credit card or bank account but no price for loading cash, or vice versa. Cards that levy this fee may waive it if you utilize direct deposit or load a particular amount on the card each month. (Be advised that a merchant or other business that accepts in-person loads on behalf of the card issuer may levy a third-party fee.) Choose a card that does not impose a reloading fee or provides a simple way to avoid one.

Monthly service (maintenance) fee:

This is a frequent price that can be as high as $9.95 per month, however some cards do not charge anything at all. Many cards that carry a monthly service fee lessen or waive it if you reload with direct deposit or satisfy a minimum monthly reload criteria. (Minimums are sometimes fairly high.) Many cards allow you to pay a monthly charge or a lesser per-purchase transaction fee if you’re not a frequent user.

Purchase transaction fee: 

This is a tiny price imposed for each purchase transaction (say, 49 to $2). Some cards with these fees assess them only on debit (PIN) or “credit” (signature) transactions, but others assess them on both. Many cards allow you to pay a per-transaction cost instead of a monthly fee, which may make sense if you use the card infrequently. Paying both a monthly maintenance cost and a purchase transaction fee is unnecessary. If you opt to pay a buy transaction fee, ensure that there is a monthly cap (say, $10). After you reach that threshold, you will not be charged a fee for any future purchases you make within the same month.

If you attempt to make a purchase with insufficient funds in your prepaid card account and do not have overdraft coverage (see next section), the transaction will be denied. This fee is not charged by all credit cards; look for one that does not.


ATM withdrawal fee:

Many cards provide free withdrawals on certain ATM networks. For withdrawing money from an out-of-network ATM, almost all prepaid card issuers levy a fee (typically $1 to $3). In addition to your card’s out-of-network ATM cost, you may be charged a premium by the ATM’s owner/operator. Choose a card that permits unlimited free in-network ATM withdrawals to avoid both fees—they’re not difficult to discover. Check to see if the card allows you to get cash back with no fees when you make a purchase at a grocery store or other point-of-sale location.