Only 1 officials said they regretted his inconvenience and were refunding Mr. A spokesman for Pay-O-Matic said the card was fairly new and the firm was working to make the fees more transparent. “I need every last dime I got I’ve got a newborn,” Mr. Blocker returned to Pay-O-Matic to complain and only then was provided a detailed list of more than two dozen fees, he said. As soon as the cash from his paycheck landed on his card, he noticed fees accumulating. Like many workers, Tyrell Blocker, 20, of Brooklyn, could ill afford the surprise when he took such a card last week to a Pay-O-Matic Financial Services store in Manhattan after a bank turned him down for an account because he lacked one of two required pieces of identification. “If you look at these products today compared to even a checking account, many consumers have found that they can be far less expensive,” said Gary Palmer, chairman of the Network Branded Prepaid Card Association.īut even as the industry expands, many prepaid cards continue to charge fees including for purchases and paying bills that can quickly accumulate. Industry officials say the cards are a good deal because users can avoid the fees charged on low-balance bank accounts and at check-cashing stores. Often, they turn to these cards because they cannot open a bank account, or they become fed up with the costs of check-cashing stores or overdraft fees on checking accounts. More typically, it comprises low-income people and immigrants who have fewer financial options than other Americans. The market includes college students who do not want to carry around wads of cash and consumers who do not want to type their credit card number into the Internet. “It’s a very expensive way to bank,” said Jean Ann Fox, director of financial services at the Consumer Federation of America.Ī cottage industry only 10 years ago, reloadable prepaid cards have tapped into the vast pool of about 80 million consumers who have little or no access to bank accounts. The Silver Prepaid MasterCard advertises that it does not charge for overdrafts as many debit cards do, but it gives itself the option of charging a $25 shortage fee if customers exceed their balance. The Millennium Advantage Prepaid MasterCard goes further, listing an application fee of up to $99.
balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service. Like many competitors, it then charges numerous recurring fees, including $1.75 for each A.T.M. The MiCash Prepaid MasterCard docks cardholders a $9.95 activation fee. But their convenience comes with a catch: fees, often hidden in the fine print. withdrawals, store purchases and online shopping.įor many people who do not have bank accounts, or cannot get a credit card, the appeal is irresistible, making the reloadable cards among the consumer banking industry’s fastest-growing products. No Bank Account Needed,” says the Green Dot Visa Prepaid Card: Just pay at the register and the card is ready for A.T.M. Walk into a Wal-Mart or almost any major drugstore, and rows of plastic worth $25, $100 and even $500 beckon from kiosks alongside prepaid phone cards and gift cards for retailers. Buying a prepaid debit card these days is just about as easy as picking up a bottle of shampoo or a candy bar.
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