7 in 10 prepaid cards are hiding fees
New regulations proposed for fee transparency
AUSTIN, Tx – 3 out of 10 surveyed prepaid debit cards are fully disclosing their fees to consumers, according to new research by CreditCards.com. The study reviewed the fees printed on the packaging of 10 widely available prepaid cards sold at big retailers, drug stores and payday lenders. For more information, go to:
American Express Bluebird, American Express Serve and Green Dot Visa Gold were the only cards analyzed to meet the proposed disclosure guidelines set forth by the U.S. Consumer Financial Protection Bureau (CFPB). Payday lenders, ACE Cash Express (ACE Elite card) and Speedy Cash (Opt+ card) were the biggest offenders in terms of not disclosing fees. In fact, their cards were offered without any fee disclosures until specifically requested.
"What's concerning is that many consumers are turning to reloadable prepaid debit cards to avoid overdraft fees related to checking accounts," said Matt Schulz, senior industry analyst at CreditCards.com. "However, due to lack of disclosure, consumers are being charged with excessive fees for infractions they didn't even know existed," Schulz added.
Knowing the details for a card's fee structure can make a big difference in terms of monthly expense. For example, a user with Green Dot Visa Gold making 20 purchases a month, four ATM withdrawals and four cash reloads could pay as much as $35.75 in fees. But knowing how fees are structured, the same user could cut the monthly cost to $5.95, the amount of the monthly service fee. And even that fee can be eliminated with direct deposit of a paycheck, bringing monthly costs to $0.
The CFPB listed 13 fees that prepaid debit cards should show on their packaging as part of their proposed regulations.Typical fees charged by issuers include a monthly fee, ATM withdrawal non-network fee and cash reload fee. Other potential fees include ATM balance inquiry, inactivity fee, additional card or lost card fee, foreign transactions, international ATM use, paper statement, liquidation check, declined transaction fee, stop payment fee and bill payment fee.