Prepaid Debit Cards Getting Popular
The popularity of credit cards is currently waning largely due to the continuing efforts of credit card companies to maximize their profits at the expense of their customers. In the past few months, credit card holders have seen their fees and interest rates skyrocket, their available credit fall, their minimum monthly rates become almost unbearably high and their credit cards get slapped with new fees. No wonder consumers are backing away from credit cards.
The fall of credit cards have given rise to alternative plastic payment methods. One of the most popular are debit cards. Unlike credit cards, debit cards offer less of a risk. This is primarily because debit card purchases are based on an existing bank account’s deposit whereas credit card purchases are actually mini loans to be paid later on. As such, debit cards will not penalize cardholders with interest fees, one of the biggest costs in using credit cards.
Now, a new type of debit card is seeing major distribution among consumers. These are called debit cards and they are everywhere. Consumers can now simply walk into any major store or even a major drug store and already access prepaid debit cards ranging from $25 to $100 to $500 dollar amounts. All a consumer needs is enough cash to buy the credit card and he or she can already use the card for any card-type purchases, ATM withdrawals and online transactions.
Prepaid debit cards definitely have their own advantages. Card holders need not worry about interest fees or going over their limits. They don’t even have to go through all the motions of applying for a card. As a matter of fact, prepaid debit cards are very attractive for consumers who do not have their own bank accounts or who cannot access traditional credit or debit cards.
All the advantages that a prepaid debit card brings also come with a catch, however. Prepaid debit cards also bring many hidden fees for their card holders. For instance, the MiCash Prepaid MasterCard issues a $9.95 activation fee right off the bat. Aside from that, there are also several recurring fees such as a $1 fee for ATM balance inquiries, $1.75 fee for ATM withdrawals, $4 monthly maintenance fee, $2 60 day inactivity fee and $0.50 for every purchase made with the card. Even calling customer service will dock the card holder a $1 fee.
It seems that prepaid debit card not only bring a lot of benefits, it’s also fully loaded with fees. As Jean Ann Fox, the financial services director of Consumer Federation of America says, “It’s a very expensive way to bank”.
