Prepaid cards can help with holiday shopping
BY ANNE KATES SMITH Money Power
Sunday, November 11, 2012
11/11/12 at 6:34 AM
This holiday season more consumers will be shopping - and perhaps bill paying, check cashing and visiting the ATM - with prepaid cards. You can purchase prepaid cards in stores or online, and you can fund them over and over - even using direct deposit to add your paycheck and, with some cards, to deposit other checks, too.
As fees rise on checking accounts, some consumers are firing their banks and using prepaids instead. Others are subbing prepaids for credit cards to get a handle on spending because prepaid cards generally don't allow you to go over your preset limit.
Prepaid cards can be a good deal but only if you watch out for the pitfalls. The cards come with a bevy of fees, some of which may not be disclosed or which may make comparison-shopping a challenge.
The surprising finding from Pew is that prepaids can be cheaper than checking accounts for many consumers. ATM fees are similar for both. Monthly fees for prepaid cards average half of what checking accounts charge. Overdraft charges are virtually nonexistent.
The key to using prepaid cards wisely is choosing one with services and a fee structure that fit your needs. Want to ditch your checking account? Look for a card that has a broad ATM network and allows direct deposit and online bill paying.
Original Print Headline: Prepaid cards can aid holiday shoppers
Anne Kates Smith is a senior editor at Kiplinger's Personal Finance magazine. To send her a question or comment, go to tulsaworld.com/kiplingerfeedback.