Prepaid debit cards sound like a great deal. Just top up the card and you can use it straight away to buy things in store and online. You don't need to pass a credit check. You even don't need a bank account. You don't have to worry about becoming overdrawn; once the money is gone, it's gone. Prepaid debit cards offer all of the convenience of cash, without actually having to carry cash. They make great gifts. Unlike traditional gift cards, prepaid debit cards aren't limited to any one mall or store. The Visa or MasterCard logo adds legitimacy, making it look like you're using a conventional credit card.
Prepaid debit cards are very popular with low-income individuals who do not qualify for credit cards. What many users don't realize is that they're laden with hidden fees. For example, the MiCash MasterCard has a activation fee of $9.95. If you want to use it to withdraw cash from an ATM, you'll have to pay $1.75. Want to check the balance on your card? That'll be another $1.00. Every time you use the card, you'll pay $0.50. There's also a monthly maintenance fee of $4, plus a $2 inactivity fee. If you have a problem with the card and need to call customer service, it'll cost you $1.00.
Want a nice and shiny card? The Millennium Advantage Prepaid MasterCard looks just like a credit card. It also charged an outrageous $99 application fee. In contrast, it costs nothing to apply for a credit card, and banks offer debit cards free of charge with every checking account.
Prepaid debit cards may seem like a good solution for people who are excluded from traditional financial services. However, the hidden fees make them a raw deal for those who can least afford to lose that money.