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How To Evaluate Prepaid Card Options

Perhaps, you have already noticed. Banks now offer a variety of prepaid cards. They are popular to. According to a 2012 report by

"Consumers loaded $57 billion onto prepaid cards in 2011, a nearly 33% increase from 2010, and that number is expected to rise by 44% to $82 billion in 2012, according to the Mercator Advisory Group. By 2013, the group predicts consumers will load $117 billion onto prepaid cards, which would mark a 200% usage increase in just three years."

With so many prepaid card options, how can a consumer pick the best card? It all depends upon your financial situation. Of course, if you have the money, opening traditional checking and savings accounts at a bank or credit union is probably the best route. There are several articles in this blog to help you decide if moving your money to a prepaid card is a wise choice.

If you are determined to use a prepaid card instead, the best card for you probably depends upon your specific financial situation: how often you are paid, how much you are paid, the format of your pay, your spending and shopping patterns, and if you perform online banking.

In its 2012 report about prepaid cards, presented three scenarios to help consumers evaluate and find the best prepaid card. The three scenarios:

  • Scenario 1:a person paid $2,000.00 monthly, whose employer offers direct deposit, visits an ATM once per week, expects to makes five purchases per week with their prepaid card, and pays two bills per month by check.
  • Scenario 2: a person gives their teenager a $100.00 monthly allowance. The teenager visits an ATM twice per month and expects to makes two purchases per week with the prepaid card each week. In this scenario, money is loaded onto the prepaid card from the parent's bank or PayPal account.
  • Scenario 3: a person paid weekly and earns $1,600.00 monthly, does not have the direct deposit option, and expects to make three purchases per week with the prepaid card. In this scenario, the person must load money to their prepaid card and make ATM withdrawals each week.

Of course, you can pick the scenario that matches or is closest to your financial situation. It might be that none of these scenarios adequately describe your financial situation. Maybe you have more children, earn a vastly different amount, or shop more often (e.g., groceries, lunches while at work).

Of course, you have the option to give your teenage child an allowance in cash and let him or her learn by deciding whether or not to transfer their cash to a prepaid card. Regardless, if is important for both parents and youth to learn the differences between credit cards, debit cards, and prepaid cards. Banks can charge a variety of fees on prepaid cards. Some employers offer banking services, pay their employees via prepaid cards, and administer health care spending accounts via prepaid cards.

In its 2012 report about prepaid card, listed the monthly costs for various banks' prepaid cards for the above three scenarios, and which prepaid cards are not suitable. Some of the monthly costs exceed $26.00, which is a lot ot pay for any banking option. So, it is wise to shop around and do your homework first. Know your pay and spending patters, then compare prepaid cards based on your banking habits.

Whatever you decide, it is wise to revisit your decision after a few months to see if your banking habits changed. A change in pay, ATM withdrawals, out-of-network ATM withdrawlas, and/or spending may make a prior decision no longer best for you:

"... every card has different fees based on the specific usage of each card. How often a person uses an ATM and how much money they load onto the card each month are the most important drivers in the cost of each card..."

If you use a prepaid card, what do you use it for. And what factors influenced your prepaid card choice?


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Lena Johnes

I've had lots of overdraft troubles with a regular credit card, so I've started looking for the alternatives. The problem is, the most of the prepaid credit cards are much more expensive in the end. There are so many fees hidden, that it's not even worth starting to use them. Well, at least for me.
So I pulled myself together and started to be more careful about what I do with my credit card. And as for the usual Internet fun - I've started buying a certain ammount of prepaid gift cards or game cards like Paysafecard, for example. This means that I only have this certain ammount of money to be spent on online games and goodies and when the credits are out, the fun is over. Such prepaid cards normally don't have any hidden fees, so I am very happy with them.


Thanks for sharing your experience. It is good to read that you are paying close attention to the fees with prepaid cards. There are fewer disclosure requirements with prepaid cards, so I cannot over-emphasize the importance for consumers to know their rights with prepaid cards:

Sometimes, the best and simplest method is to shop with cash, because you can't spend cash you don't have in your purse/wallet. Like you, I buy a few prepaid gift cards for gifts for family members and friends.



@Lena&George- i am also a fan of prepaid cards! The security and ease of use is what counts for me most. I have been enjoying a variety of sites with the paysafecard and have never encountered a problem.
@George would you recommend this card as well or do you have other cards that you find more "attractive"/"useful"?


Kyndra: I have not used the paysafecard. I am not familiar with this card. So, I cannot comment on it.

Everyone: I do not buy prepaid gift cards in shopping malls. As I have mentioned in other blog posts, the only prepaid cards I use are for gifts, and those are branded cards good only in retail stores with the same brand (e.g., Dunkin Donuts, Spaghetti Factory).



There is no secret with those prepaid cards, banks look for bank profit and secure it. No philanthropy around this system. The only thing is even if it costs a little more, it could maybe help to the equilibrium of the bank account if one is very disciplinated.

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