SAN FRANCISCO (CBS 5) — Millions of Americans are replacing their banks and credit cards with prepaid reloadable cards. But many consumer advocates are concerned because of possible fees.
Its expected $440 billion will be loaded onto prepaid cash cards within the next few years. But Michael McCauley from Consumers Union said, “They’re loaded with fees and often those fees aren’t disclosed except for in the really tiny fine print.”
McCauley suggested finding out how what the fees are before purchasing a prepaid reloadable card. CBS 5 ConsumerWatch went to WalMart to purchase a reloadable card, which had a $3.95 fee. But they were out of stock. We then ordered a card directly from Green Dot where the activation fee was waived. When it came to loading the card, there was a $4.95 fee at 7-Eleven plus a $2.50 charge for any cash withdrawal.
The biggest shock came when the card was used to make a plane reservation that had to be canceled. Southwest Airlines did reimburse the funds but it took 13 days to get a full refund.
McCauley also said if a card is stolen or lost, retrieving any funds may be. “You may not get any of your money back because it only comes with voluntary protections and the company may decide not to honor those protections,” he said.
For those with poor credit, a prepaid card may be the only option. “Think about how you’re going to use that card so you can figure out the best way of minimizing those fees,” McCauley said.
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