Prepaid cards have a reputation for nickel-and-diming their users, but those fees are dropping, a new report says.
Consumer Reports released a report analyzing the current field of prepaid plastic. These cards are the fastest growing payment method, CR says. By the end of 2014, a projected $167 billion will be loaded onto prepaid cards, up 42 percent from 2010. They’re one of the few options available to the more than 1 million low-income Americans who The New York Times says have been “effectively blacklisted” from getting a bank account due to overdrafts and other things banks decide make one unworthy.
Among the 26 cards CR analyzed, the top three are:
- Bluebird with direct deposit (American Express).
- H&R Block Emerald Prepaid MasterCard.
- Green Dot Card (Green Dot Bank).
The worst reviewed cards are:
- Reach Visa Prepaid Card (Tom Joyner).
- Redpack Mi Promesa Prepaid MasterCard.
- American Express for Target Card.
CR ranked the cards on four factors: cost and value; the availability of ATMs and bill pay; FDIC insurance; and fee transparency.
Here are some more findings from the report:
- Bank prepaid cards are not necessarily cheaper than other prepaid cards, and usually don’t have any special advantages such as bill pay.
- Prepaid cards still don’t have the protections traditional debit cards do. All surveyed cards offer “some form of loss or fraud and recredit polices,” but many are vague and there’s nothing saying the cards can’t revoke them later.
- Fee information is often hard to find, and there’s no consistent fee terminology across cards, which can make comparison shopping difficult. The full report does its best to provide a comprehensive listing of fees for every reviewed card on Page 9.
Does this report give you any additional confidence in prepaid cards? It will be interesting to see how the forthcoming Occupy Wall Street prepaid card stacks up next time Consumer Reports looks into things.