For Immediate Release - February 25, 2014

Office of Consumer Affairs Reports Prepaid Cards a Costly Alternative to Bank Accounts

BOSTON - Prepaid cards are gaining popularity, but with hefty fees and confusing policies these cards can end up costing consumers more than traditional bank accounts, according to a recent survey xls format of Prepaid Card Fee Survey
 from the Office of Consumer Affairs and Business Regulation (OCABR).

“Our office understands the emergence of prepaid cards as alternative banking products, but consumers should not be charged just to access their own money,” said Consumer Affairs and Business Regulation Undersecretary Barbara Anthony. “Massachusetts consumers can save hundreds of dollars each year by avoiding prepaid cards and opening a Basic Banking checking account.”

“Community banks and credit unions offer many low or no cost options to meet consumer banking needs,” said Commissioner of Banks David Cotney. “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.”

Prepaid cards are stored-value cards that consumers can use to access money loaded onto the card in advance.  The cards, which can take the form of a gift card, credit or debit card, have gained popularity among unbanked or under-banked consumers as an alternative to traditional checking accounts.

The survey, conducted between December 16 and December 20, 2013, examined 16 different purchasing and use-related fees for 11 randomly-selected prepaid cards. Researchers used the fee schedule from each card’s website, although they were not always easy to find and were quite confusing at times.  Upon further review, OCABR discovered additional types of fees associated with the products.Notably, several cards surveyed had various types of plans involving a different fee schedule. For example, a consumer could choose to avoid paying a monthly fee in lieu of paying more types of other fees, such as transaction fees or PIN use fees.  These options make it even more difficult for consumers to anticipate the cost of having and using a prepaid card.

The most common fees charged by the prepaid cards surveyed were monthly fees, ATM withdrawal fees, and balance inquiry fees, which were each charged by nine of the 11 cards surveyed.  Major findings of the survey included:

  • The Wired Plastic Visa Prepaid Card had 14 distinct fees;
  • The highest fee surveyed was a $25 cancellation fee for the BB&T Prepaid Card; and
  • Six of the cards charged consumers a fee for each transaction made.  These use-related fees add up quickly, and can make small purchases cost significantly more than the total price of the items.

The following fees were also charged by the prepaid cards surveyed:

  • Card purchasing fees up to $9.95, not including minimum card loading requirements;
  • Monthly fees up to $9.95;
  • ATM withdrawal fees up to $2.50 per withdrawal;
  • Balance inquiry fees up to $1.50 per inquiry;
  • PIN use fee up to $2 per use;
  • Monthly inactivity fee up to $5.95 after 90 days inactivity; and
  • Card replacement fee up to $10, or $15 with expedited delivery.

To view the full survey results, click here xls format of Prepaid Card Fee Survey

In 1994 the Massachusetts Community and Banking Council (MCBC) developed a program called “Basic Banking,” which offers low-cost checking and/or savings accounts at nearly 130 financial institutions across the Commonwealth. Basic Banking checking accounts cost no more than $25 to open, chargea $3 monthly fee, and give the consumer at least 15 free withdrawals and eight free checks per month.  

“At the Massachusetts Community and Banking Council, we want residents to know that there is an alternative to relying on expensive check cashing services or pre-paid cards to pay bills and conduct financial transactions,” said MCBC  Executive Director Doreen Treacy. “There are 127 financial institutions across the Commonwealth participating in the MCBC Basic Banking program, and we want consumers to know that they can find reliable, low cost bank accounts that will serve as a foundation for their financial future."

OCABR contacted the institutions that offer Basic Banking checking accounts to ask whether they offer a debit card with the account. Each of the 62 that responded do offer debit cards. Consumers can find out their individual savings using a Basic Banking account by visiting

The Division of Banks is an agency within OCABRthat oversees state-chartered banks and credit unions, check sellers, debt collectors, foreign transmittal agencies, mortgage lenders and brokers. 

OCABR is committed to protecting consumers through consumer advocacy and education, and also works to ensure that the businesses its agencies regulate treat all Massachusetts consumers fairly. Follow the office at its blog, on Facebook and on Twitter @Mass_Consumer