Money Fix: Prepaid credit card fees vary widely

The rules and fees on prepaid credit cards

The rules and fees on prepaid credit cards vary widely. They can be costly, a new survey from Bankrate.com shows. Fail to study up and it will cost you. This photo is from Nov. 19, 2009. (Credit: AP / Michael Probst)

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A new survey from Bankrate.com is clear: Prepaid credit cards are like snowflakes, no two are alike. Fees vary widely. Fail to study up and it will cost you.

The survey found that 83 percent of prepaid debit cards charge monthly fees, and one-third waive them if a certain amount is loaded onto the card. More than half have activation fees of $2.95 to $9.95. Receiving statements by mail costs $1 to $5.95, and nearly 30 percent charge for customer service calls, from 50 cents to $4.95. Plus, there can be annual fees.

Know what you're getting. Reloadable cards can be a good cash alternative for someone unable to maintain a checking account. If lost or stolen, they can quickly be replaced or canceled. They help with budgeting -- you only spend what you have. Some cards offer rewards, purchase protections, and perks such as roadside assistance.

Not a panacea. However, "Not all reloadable cards are FDIC-insured. Look for one that is," says Chris Giamo, TD Bank regional vice president, Metro New York, who is based in Melville. Understand there can be limits on how much can be kept on the card and how much cash can be withdrawn or loaded at a time.

Keep track of your balance. "Sign up for email or text alerts so you always know your balance," says MasterCard spokeswoman Beth Kitchener of Purchase.

And remember, "A prepaid card doesn't help build credit or improve your credit score," says Leslie Tayne, a Melville attorney specializing in financial issues.

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