Prepaid cards are more costly than traditional bank accounts, according to a survey ‘Prepaid Card Fee Survey’ by the Office of Consumer Affairs and Business Regulation (OCABR).
Prepaid cards are stored-value cards, which can be used by customers to load money in advance for use in future. As the cards can take the form of a gift card, credit or debit card, their popularity over traditional checking accounts has increased.
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According to OCABR, the increasing demand added with high fees and confusing policies make the prepaid cards more costly.
The survey, which examined 16 different purchasing and use-related fees for 11 randomly-selected prepaid cards, found that nine of the 11 cards surveyed were charged with monthly fees, ATM withdrawal fees and balance inquiry fees.
OCABR undersecretary, Barbara Anthony, said their office understands the emergence of prepaid cards as alternative banking products, but consumers should not be charged just to access their own money.
"Massachusetts consumers can save hundreds of dollars each year by avoiding prepaid cards and opening a Basic Banking checking account," Anthony added.
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By GlobalDataMassachusetts Banks commissioner, David Cotney, said community banks and credit unions offer many low or no cost options to meet consumer banking needs.
"Consumers who choose to use a prepaid card should review the product disclosures before purchasing it since there may be a wide range of fees associated with using the card," Cotney added.
