Consumer Report: Best Prepaid Cards

Consumer Report: Best Prepaid Cards »Play Video

This two-photo combination image shows, at top, a Feb. 11, 2005 file photo of trays of printed social security checks waiting to be mailed from the U.S. Treasury's Financial Management services facility in Philadelphia, and an undated photo provided by the Treasury Department of a Direct Express Card. Starting next year, the check will no longer be put in the mail to millions of Americans who receive Social Security and other government benefits. The federal government, which issues 73 million payments a month, is phasing out paper checks for all benefit programs, requiring people to get payments electronically, either through direct deposit, or a debit card for those who don't have bank accounts. (AP Photo/Department of Treasury, File)

BOISE, Idaho (KBOI) - Prepaid debit cards are exploding in popularity. They can be used to make purchases in stores, online, and to get cash from an ATM.

You can only spend what you load onto the card, so no credit check is needed. But Consumer Reports Money Adviser found some prepaid cards are much better than others.

Michael Feight takes care of almost all his financial transactions with his Green Dot prepaid card.

"It's convenient. It's accepted everywhere Visa is accepted," Feight said.

Feight is very careful how he uses the card and says he's able to avoid almost all fees. Consumer Reports Money Adviser's investigation of 26 prepaid cards finds many carry hefty charges.

"You can be charged an activation fee, a swipe fee every time the card is used, a monthly maintenance fee, and even a dormancy fee for not using the card often enough," Margot Gilman of Consumer Reports said.

Consumer Reports says some of the highest fees are on the AccountNow Gold Visa Prepaid Card. It charges $9.95 per month, as much as $4.95 to load money onto the card, and $2.50 for every ATM withdrawal. With the NetSpend Prepaid Visa Pay as You Go card, you're charged every time you use the card.

"For a daily user of the NetSpend Pay as You Go card, the 'swipe' fees could add up to hundreds of dollars a year," Margot Gilman of Consumer Reports said.

The worst prepaid card in Consumer Reports' ratings is the American Express for Target.

"You can only reload it at a Target store unless you have a bank account or direct deposit. To get cash from an ATM almost always incurs a fee. And the card isn't FDIC insured," Gilman said. Consumer Reports did find some cards offer good value and convenience. They include the Emerald card from H & R Block and the Bluebird card with direct deposit. With most prepaid debit cards, figuring out the fees can be tough. No matter which one you're considering, read the fine print carefully. Also be aware prepaid cards are not protected by law against loss or theft, though most issuers have voluntary protections in place.
The Green Dot Card is another good choice. As Michael Feight has found, almost all fees can be avoided if you use it 30 times a month and reload with direct deposit.