Pre-paid cards can offer flexibly, but givers and receivers need to pay special attention to the terms and conditions, which can include substantial fees and limitations. Trish Powell of the Better Business Bureau explains.
Tips for wisely choosing and using a prepaid bank card:
Research companies with BBB. There are multiple companies offering prepaid bank
cards, so to assure you're working with a trustworthy company that has the type
of card most beneficial for you and your needs, visit bbb.org to find BBB
Accredited Businesses or to review a company's BBB Business Review.
Look into additional fees. Read all the information that comes with the card so that you understand which fees are mandatory and which ones you can avoid. Look carefully for any differences in transaction fees if you choose to sign for a purchase (by pushing "credit" at the card reader) instead of entering your personal identification number or PIN (as a "debit" transaction).
o Possible fees can be applied when:
Activating your card
Adding money onto the card
Inquiring about your balance at an ATM
Receiving a statement in the mail or
Speaking with a customer service representative.
Some cards may also assess a fee if you try to
spend more money than is on the card. Don't assume there can't be overdraft
fees with a prepaid card. Just as you would with a checking account, track your
balance, perhaps with a check register, to avoid the risk of overdraft fees.
Understand consumer protections. Some prepaid cards may not provide the full range of federal protections afforded to other traditional credit/debit cards.