5 Hidden Fees of Prepaid Credit Cards
Many people think that using a prepaid credit card is ideal when it comes to not overspending, and they are especially appealing to those who have imperfect credit ratings. The problem is that these cards often have hidden fees that people do not know about before signing on the dotted line and opening the account. Once people start losing their hard-earned money, they begin to understand how much these hidden fees can really add up. At that point, the consumer must decide if they want to continue to lose money or if they should cancel the account, but that option doesn’t always remedy the situation.
The Sign-up Fee
The first hidden fee most consumers find out about is some type of sign-up fee. This can range from a few dollars to a hundred dollars, sometimes even more. This costs the consumer just to open up the account and have the privilege of using the credit card. The fee is usually taken out of the initial deposit, lowering the actual amount that can be spent right from the start.
The Deposit Fee
For some prepaid credit cards, the hidden fees lie with the deposits. They charge you every time you deposit money on to the card, no matter how much or how little you put on. These fees can vary, but each deposit typically costs the consumer a few dollars. If you add money to your account each week when you get paid, those few dollars can quickly add up and decrease the amount of money you have available to spend.
The Balance Check Fee
While many cards allow you to check your balance through some means for free, others will charge you some hidden fees to have constant access to that information. For example, most companies allow you to check your prepaid credit card balance online for free, but if you want to set up mobile balance checks, that often costs a fee each time you use it. The cost is usually minimal, but if you check your balance often, it can add up quite quickly. Even if the hidden fee is only a dollar, just checking your balance once a day can cost you $30.00 a month on average.
The Allowable Overdraft Fee
Some of the prepaid credit cards on the market today allow you to buy overdraft protection on your card. What this means is that you can overdraft your account by a slight amount if necessary to pay for an expense with your card. What the company does not often tell you is that there is a hidden fee involved with this privilege, plus the interest rate often contains a percentage with triple digits. This means that if you overdraft your prepaid credit card, you will likely be paying back at least twice the same amount you over-drafted by, plus the fees. That can add up quite quickly, even if you only overdraft your card by a few dollars.
The Cancelation Fee
The biggest hidden fee that most prepaid credit card companies do not tell you about is their cancelation fee. This is because they want you to stay with them even after you find out what the fees are going to be. They often charge a relatively hefty fee to try and deter you from leaving or stopping using their services. This fee is often unavoidable, so make sure you know and understand the fine print before signing up for any of these types of prepaid credit cards.
Prepaid credit cards can be a service of convenience, but they can also be costly. Make sure you fully understand what you are getting yourself into before signing up for one of these cards blindly. The fees can take away a good portion of your money before you even get a chance to spend it, if you pick the wrong card, so do your homework to help avoid any of the hidden fees you can.
