If a celebrity endorses a prepaid card, it’s almost always a rip-off. But there are several other costly prepaid cards you should avoid because they charge high monthly fees and fees for even the most basic transactions. Here are the worst prepaid cards.
This card almost glories in how expensive it is – but look how much publicity it got! It’s certainly good for the Kardashians, not so much for their fans.
The monthly fees alone will cost you $100 a year. And that’s only the beginning. You also get charged $1.50 each time you withdraw funds at an ATM machine, and $2.00 each time you use bill pay. With normal usage, I would estimate this card will cost you more than $200 a year, not $100, making this the most expensive prepaid card.
Of course, if Mommy or Daddy is paying for it, who cares?
Credit – I mean blame – hip-hop entrepreneur Russell Simmons for starting the celebrity-endorsed prepaid card trend. Supposedly the objective is to teach sound financial lessons to the unbanked. And he’s probably right – but it will be a painful lesson.
The card’s website claims that it will save you hundreds of dollars a year by avoiding check cashing, overdraft, and interest fees. Only instead of paying a bank, you’ll pay a lot more money in fees to Russell Simmons Inc.
There’s a $10 monthly fee ($120 a year) and a $3.00 one-time activation fee. Bill pay costs $2.00 to enroll, then $1.00 each time you pay a bill. You get two free ATM transactions a month, but subsequent ones cost $2.50 each, plus whatever fee the ATM charges.
This card is quite expensive. Although it purports to be competitive with bank checking accounts or a secured credit card, it’s not because of all the fees.
The monthly fee is $9.95, and you need to load $3,000 a month to get that fee waived. Most people will have to have their entire paycheck direct deposited to the card to avoid that fee. There is a one-time first-load charge of $9.95. ATM fees are quite high: $2.50 to withdraw money, and $1.00 to check your balance.
On the positive side, direct deposit is free and so is online bill pay. You also can earn a $25 bonus if within 60 days of opening the account you set up direct deposit and make a minimum of two direct deposits of at least $100 within 35 days of each other.
ReadyDebit gives you lots of options. Unfortunately, they’re all bad and hard to understand.
There are four payment plans, ranging from $14.95 to $3.95 a month. Generally, the lower the monthly fee, the more transaction fees you pay. With the higher priced plans, you avoid some of those fees, but still wind up paying a lot of them. For example, the lower fee plans charge you $2.25 for ATM withdrawals; the higher fee plan charges “only” $2.00. All plans charge a $9.95 card issuance fee.
None of the options are good, but the high monthly fee plans are the worst. The various plans are also way too confusing.