Prepaid Debit & Credit Card – Hidden Fees

Here’s the set of fees that you need to watch out for when looking at buying prepaid debit cards or prepaid credit cards.

First Prepaid Card Purchase Fee

This fee is generally charged when you get your prepaid card the first time at a store or online. The purchase fee is different from company to company. If you’re buying a prepaid debit card for the first time, some companies won’t charge you a purchase fee, while others do.

From what I’ve seen, the companies that DO NOT charge a purchase fee will charge an activation fee for your prepaid card, while the ones that charge the fee when you buy the card will not charge you an activation fee.

I’ve found that when you’re buying a reloadable prepaid debit card, you’ll either see an activation fee or a purchase fee. However, if you’re buying a prepaid gift card, you’ll likely pay BOTH the purchase fee and the activation fee.

Prepaid Card Activation Fee

As mentioned above, a prepaid card activation fee is little more than a disguised “prepaid card purchase fee”. Instead of asking you to pay for your prepaid VISA / MasterCard / American Express / Discover card at the time of purchase, they will deduct an activation fee when you call to activate your card.

Most prepaid card companies have an activation process that you need to go through once you walk out of the store. Most of the time, that means you need to call a number and enter some personal information (like your date of birth or SSN). After you confirm this information by phone, your prepaid debit card is active and ready for use.

Once this “active” status is confirmed through the “card activation process”, you might see an activation charge on your account – and it will be deducted from you initial deposit balance.

For example – if you got yourself a “free prepaid card” at a store and you loaded 100 dollars on it. You then walked out of the store and called the number to activate it. If your prepaid card contract says that the card carries an activation fee of 12.95$, you would see that charge on your prepaid card statement for that amount. Therefore, instead of having 100$ to spend, you would have 87.05$ as an available balance on your card.

So make sure you know what your prepaid debit card activation fee is. It’s generally written out in your prepaid card purchase contract (which is written out on the back or the inside of the card package, for most cards).

Card Replacement Fee

Unlike regular credit cards, which get replaced for free (mostly because you pay SO MUCH INTEREST on them) if they get lost or misplaced, most prepaid debit card companies charge you a replacement fee if this happens to your prepaid card. Even the best prepaid debit and credit cards charge a fee for lost, stolen or misplaced cards. This replacement fee is generally deducted from your prepaid card balance once you request a replacement card.

Card replacement fees generally run between 5.00$ and 20.00$, depending on the prepaid company you’re dealing with. While it’s easy to get a reloadable prepaid debit card, it’s harder to get a lost prepaid gift card or a prepaid internet card replaced. Companies will ask you to send in the original purchase receipt. So make sure you keep your purchase receipt for any gift card you buy!

Transaction Signature Fee

The prepaid card transaction signature fee is a sneaky way to say “there’s a fee time you use your prepaid debit card”. This fee is DIFFERENT from the ATM use fee and the PIN transaction fee for most companies.

Here’s the simplest way to describe the prepaid transaction signature fee. Each time you SIGN on a receipt once you’ve used the card, you are charged this fee. This means that most of the time you use the card in the USA and worldwide, you will be charged this fee if your prepaid debit card provider charges one.

Transaction PIN Fee

You won’t see this one much in America, but it’s very present in Canada, Europe and Australia. Yet, most banks are now moving to PIN (a.k.a.: chip) based cards for purchases. You might not know it, but you ALREADY use PIN purchases and pay a fee for it. Each time you go to the ATM and pay a fee for withdrawing money, you pay the “PIN Transaction Fee”.

This is just like the ATM example. Each time you’re at Wal-Mart and you use a “chip” card and have to enter your pin, your prepaid card company will charge you this fee (provided they charge for it).

International Transaction Free

Each time you use the card outside of the USA, this fee is deducted from your prepaid card account. The same goes for Europeans that travel outside of their home country (although it’s a little more scammy in the European perspective). For example if you are an Irish guy who bought a prepaid card in Ireland, you will be charged if you use the card in Germany.

Monthly Prepaid Card Fee

Some prepaid debit card providers ask you to pay a monthly fee. This fee ranges between 4.95$ and 20.00$ depending on the company you’ve chosen for your prepaid VISA / Mastercard. This fee is generally deducted form your balance on the monthly anniversary of your card activation (however, some companies choose the purchase date as the date they will charge you this fee).

For example – if you buy a card on October 18 and you activate it on October 20, you will likely see a “management” charge on NOVEMBER 20 as your monthly fee.

Monthly Fee With Minimum Deposits

Some companies give you a monthly fee discount if you deposit a minimum or load a certain minimum amount on your card in a week / month / initially. You should pay special attention to the dates of your cash loads on your prepaid card – and make sure you are given the discount fee if you are entitled to it.

Some cards also carry a minimum load – so if you DO NOT deposit a minimum amount of money onto the prepaid card periodically, a fee might be deducted from your account.

Account to Account Transfer Fee (Online / Phone / SMS)

Most prepaid debit cards allow you to move money form one account to another. This prepaid card fee charges for this service. I’ve known many Mexicans who use Netspend that work in the USA, who send money to their family in Mexico – who then use the card to withdraw the money from an ATM.

You have to realize that while prepaid debit card companies MINIMIZE the fees for the money transfer, they get make up that money on the “International ATM Withdrawal Fee”.

So for example, if you got two card and sent one to your family in Mexico – you might pay 1% for the prepaid account-to-account transfer. But when your mother / dad / brother / sister withdraws this money from an ATM in Mexico, you will be charged the “International ATM Withdrawal Fee” on your prepaid debit card statement (on top of that the bank to which your family withdraws money at will also have a fee).

USA ATM Balance Inquiry Fee

This is the fee that’s charged to your prepaid debit card when you go to an ATM and ask for a balance inquiry. This fee is charged ON TOP of the ATM fee that the bank gets.

ATM / Payment Decline Fee

This fee is deducted from your prepaid card account each time your card gets rejected for a payment or at the ATM. Let’s say you load 100$ onto your card, and after activation (which may cost up to 20.00$) you have 87.05$ balance left on your card. And you *think* that you have 100$ loaded so you buy a gift for your wife for 90$. You have just been declined.

So you get charged the “decline fee“. This fee also overlaps with the overdraft fee. Let’s pretend you knew that you had exactly 87.05$ in your account, and you buy your wife a gift for EXACTLY that amount. You will still be charged the “Transaction Signature Fee”. If that fee is say … 1.00$ you are now deducted that fee from your account and therefore in OVERDRAFT (which carries its own very big prepaid debit card fees).

USA ATM Withdrawal Fee

This is the fee you are charged when you withdraw money from any ATM. This fee is on top of any fee that you pay for at the ATM. For example – if your prepaid card ATM withdrawal fee is 1.50$ and the ATM fee you are withdrawing from is 2.00$, this transaction costs you 3.50$. So if you’re withdrawing 20$, it will cost you 23.50$ for that prepaid card withdrawal at an ATM.

International ATM Withdrawal Fee

This fee is deducted from your account each time you use your card outside of the USA. This fee is put on top of any ATM fee that is charged by the bank that you went to to withdraw the funds.

International ATM Balance Inquiry Fee

This prepaid debit card fee is deducted from your account when you request your balance in a country that is not America.

Bill Payment Enrolment Fee

Some companies have this fee each time you create a bill payment account to be added. You need to be careful when you add your bill payment information – because some companies will ask you to accept terms on that end – so you might be agreeing to terms that you never signed on for BUT still need to pay.

Online Bill Payment Fee

This fee is deducted from your prepaid debit card account balance when you make a bill payment using your online account interface. In general, this fee is either a percentage of the bill value OR a fixed amount.

For example, some prepaid card companies will charge a fee of 2.00$ for each bill you pay regardless of the amount of the bill itself.

If the fee is a percentage (let’s say 3% for this example), and you’re paying a bill worth 100$ form your card account, you will be charged 103$ as a total, because of the bill payment percentage fee.

Check Bill Payment Fee

This fee is generally charged to your card account when you issue a paper check tied to your account to pay for a bill. Some prepaid companies allow you to order (for a fee) and issue paper checks tied to your prepaid debit card account. Each time one of these checks is cashed, you pay what’s called the “check bill payment fee”.

Express Bill Payment Fee

Some prepaid companies offer an “express” method for paying bills from your prepaid card account, for a fee. This service is used by folks who need to make emergency payments, and can’t wait a few days for the payment to be received by a vendor. One such example is if the power company has cut of your power. You might need to get that service back up quickly, so you would make an express bill payment. The fees for this services can be quite high, as the payment is made and instantly credited.

Stop Bill Payment Fee

If you make a mill payment and it still hasn’t cleared on your vendor’s side, you can ask for the payment to be “stopped” and get the bill payment funds back into your prepaid debit card account – for a fee. This fee is generally a fixed amount to reverse the bill payment.

Phone Balance Inquiry Customer Service Fee

This fee is deducted form your prepaid card account each time you call the automated customer service number and ask for your balance. I general, this balance inquiry fee is between a few cents to 0.50$

Second Card Issuance Fee

Sometimes, you may need to issue a second card to a friend or a member of your family. This happens a lot in “money transfer” situations. For example, you could load money on your card because you live and work in Dallas, and have a family member in the Philippines withdraw the funds in their city. To get this second card issued, prepaid debit card companies charge an issuance fee and (sometimes) and shipping fee.

Agent Help Customer Service Fee

This fee is deducted from your prepaid card account when you call a live agent and have them perform an operation (such as a balance inquiry, or an account to account transfer). This is one of the sneakiest fees that debit card companies charge – basically you have to pay for making calls to customer service.

Account Statement Fee (Online)

This is the fee that’s deducted from your prepaid debit card account when you order a paper account statement to be sent to your home.

Account Statement Fee (by Mail)

If you request regular monthly account statements (on paper) to be sent to your home (much like credit card companies send regularly) you will generally be charged this “prepaid account statement fee” for each statement sent.

Prepaid Card Overdraft Fees

Prepaid debit cards carry very high overdraft fees (see our prepaid debit card and prepaid credit card reviews for fees by company and card). Because these cards are debit cards, you need to have money loaded at all times on them in order to avoid overdraft fees.

You need to be very careful when dealing with prepaid debit cards and their specific overdraft fees. One common mistake people make is to think that the monthly management card fees do NOT get charged. For example, if you’ve used up all of your funds and your account has a balance of 0.00$, and your card has a 9.95$ management fee and a 25.00$ overdraft fee, your account will be NEGATIVE 34.95$ because the monthly fee AND the overdraft fee are applied as soon as you go “under your prepaid card balance”.

Personalized Card Fee

Some companies charge you to personalize your card. In some cases (but not all) they charge a fee to give you a card with your full name embossed on it.

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