Since the recession, the number of people using prepaid debit cards has increased. Those who are having trouble getting access to a bank account (the “unbanked”) are definitely increasing their pre-paid debit card use. Even those who have bank accounts are turning, in some cases, to prepaid debit cards. According to a survey by, 27% of respondents are more likely to use prepaid debit now than they were prior to the recession.

Prepaid debit cards are increasingly popular because they feature the ability to receive direct deposit, and they can be used like a credit card. They are convenient, and widely accepted. The problem, though, is that many Americans don’t realize that they are paying the kind of fees that come with these types of debit cards.

58% of Americans Don’t Realize They are Paying Prepaid Debit Fees

According to the CouponCabin survey, more than half of Americans don’t realize that they are paying fees on prepaid debit cards. However, these cards often come with a number of fees, including fees for:

  • Reloading the card
  • Activating the card
  • Monthly maintenance
  • Checking a balance
  • Inactivity
  • Various other fees

Not all prepaid debit cards come with these fees, though. However, it’s important to check. There are a number prepaid debit cards being offered by celebrities, and marketed as boons by big banks. Trusted names like Suze Orman are offering prepaid debit cards, and that means that people might not be looking too closely at the fees they are paying. It’s important to pay attention, though.

The payment of fees is one of the drains on your wealth. When you pay unnecessary fees, your money goes right into someone else’s pocket, rather than working on your behalf. It’s vital that you understand what you are getting into when it comes to a prepaid debit card. Realize that prepaid debit is not the same as a secured credit card. Be smart about your prepaid debit use.

Smart Prepaid Debit Card Use

If you do decide to use a prepaid debit card, CouponCabin’s President, Jackie Warrick, says to be careful. Here are her tips:

  • Do your research: Before you select a prepaid debit card, look into all the fees, deadlines, contracts and more before you sign up. The fees and fee schedule can vary greatly from card to card, so make sure to pick one that best fits your lifestyle and budget.
  • Keep your credit cards active: Even if you’re using a prepaid debit card for almost all your expenses, don’t cancel your credit card accounts. Prepaid debit cards don’t build credit, so you’ll still need an open credit account to maintain your credit score.
  • Stay on track: Overages on prepaid debit cards can be costly. Check to see if there is an online account that you can use to track your purchases, or keep a detailed spreadsheet on your own.

While all not all prepaid cards are bad, there are plenty of sub-par options. Carefully consider your next move before getting one of these cards.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.