The Pros and Cons of Prepaid Debit Cards

I recently got an offer for a prepaid debit card in the mail. I’ve heard a lot about the negatives and the positives of these cards, so I decided to do some of my own research.

Prepaid Debit Cards Modern Day Slavery

If you’ve read my ranting article about banks you would know that I can’t stand greedy banks that exploit their customers.

I consider the prepaid debit card as modern day sharecropping because it doesn’t seem to add any value to the person who holds the card and there are always hidden fees. And by hidden I mean buried in the fine print. So today I went hunting for some of the features and benefits of the best prepaid debit cards.

Pros of Prepaid Debit Cards

From my research I was able to learn that prepaid debit cards can help build back your credit. If you’re trying to get cash loans online or just buy a house you need to build your credit. There are certain cards that report back to the credit bureaus and as long as you use the card wisely, you can benefit from positive reporting.

Direct Deposit

Most of the prepaid debit cards offer direct deposit. You can get your check directly placed onto your card and have it ready for immediate use.

Accepted as Visa and Mastercard

Prepaid cards can be prepaid credit cards with a Visa or Mastercard logo. There are prepaid Mastercard debit cards and Visa prepaid debit cards. This will give you more flexibility when shopping to have the convenience of a credit card without the debt.

Cons of Prepaid Debit Cards

The biggest con is the exploitative fees.

I consider them to be outrageous. Why should you get charged to use your own money?
Besides the bad fees, the detail on the fees are really difficult to find. I had to actually click through to the apply now button and search under fees to find the card member agreement.
Here are the Fees I was able to find for three popular cards.

Account Now

Activation Fee 4.95

Purchases with a PIN 1.00

Purchases with a Signature 1.00

Calls to a Customer Service Agent 1.00

Using ATM for Balance Check 1.00

Using ATM to Withdraw Money 2.50

ATM Decline fee .40

Closing Fees: If you decide to close your Card Account and request a check to bring your balance to zero, a $15.95 Check Fee will be applied per request.

ACE EliteTM FeeAdvantageTM Plan (Annual)

Activation Fee 0

Purchases with a PIN Included

Purchases with a Signature Included

Calls to a Customer Service Agent Free

Using ATM for Balance Check Free

Using ATM to Withdraw Money 2.50

ATM Decline fee 1.00

Closing Fees None

Account Maintenance Fee: $5.95 per month (waived if Card has debit or credit transaction and/or balance inquiry within 90 days.

UPside Visa® Prepaid Card

Activation Fee 0

Purchases with a PIN Included

Purchases with a Signature Included

Calls to a Customer Service Agent .99 (automated) 2.00 (Live person)

Using ATM for Balance Check .99

Using ATM to Withdraw Money 1.70

ATM Decline fee 2.00

Closing Fees None

Account Maintenance Fee: $0.99 if a minimum amount of $500 is loaded to the card within the calendar month. Otherwise a $2.99 fee applies each month.

After all of these fees, I would consider a prepaid debit card the worst possible choice for wise money management.

I read about personal finance speaker Sakina Spruell using a prepaid debit card to control spending. She experimented with loading the card and using it for everyday purchases. I hope she chose a card with little to no fees.


Whatever happened to cash?! You can use cash everywhere cards are accepted. I once had a coworker that only used cash and he always scolded us for using our debit cards for two dollars at QuickTrip. If you absolutely must open a prepaid debit card, make sure to read all of the fine print in the card member agreement before making any decisions. You should do this for credit cards as well. But more on that later.

How about you? Would you consider a prepaid debit card for budgeting?

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About LaTisha

"Money is a tool. Use it to get where you want, but don't let it control you."- LaTisha

Author, motivational speaker, entrepreneur. Love to laugh and make others laugh. Focused on helping you build success and stay motivated along the way. Start investing now and let’s build wealth together.

  • moneycone

    >>I would consider a prepaid debit card the worst possible choice for wise money management.

    You nailed it LaTisha!

  • jeff

    I’m confused. When you say prepaid debit cards, are you speaking about debit cards linked to checking accounts?

    • LaTisha D Styles

      No, I’m talking about the prepaid cards that work just like a debit card with a pin and you are able to use them as credit cards as well, but you can only use what you’ve loaded onto the card. They are not linked to checking accounts. Russell Simmons’s Rush Card would be an example.

      • jeff

        Oh interesting. I’ve never really heard about these cards, but I guess they would apply to people who can’t setup a bank account.

  • Financial Planning Tips

    Never used these cards, never realized there were so many fees…wow! To me it’s a sign that debt is worse than ever for Americans, and Russel Simmons is getting in on it even? Dang, lost some respect for him.

  • Shawanda

    I knew there were a lot of fees on prepaid debit cards, but this is ridiculous.

    “Account Maintenence Fee: $5.95 per month (waived if Card has debit or credit transaction and/or balance inquiry within 90 days.”

    How’d they come up with that?! What does a balance inquiry have to do with anything? These fees seem totally random.

    • LaTisha D Styles

      Yeah I was so shocked to see all of these fees, but there are so many people who pay them nonetheless.

  • Wealth Artisan

    All I can think of when reading this is the Kardashian Kard. Luckily, it failed, but that card had the highest fees out of all of them!

    Check the fees out if you’re looking for a laugh (or a good cry)! Thanks for spreading great information.


    • LaTisha Styles

      Yes! It’s a good thing they were not able to launch that card. It would have been a disaster!

  • Brilliant Finances

    Wow, I had never looked into the fees associated with these. It seems people who need these are being exploited!

    • LaTisha Styles

      That’s the major issue. These cards are reaching an underbanked population but the fees are ridiculous.

  • nancy

    please tell me which debit card is reported back to the credit bureau , which will help your credit?

    • LaTisha Styles

      Hi Nancy, debit cards do not report spending habits back to the credit bureau. You would have to show a history of borrowing and repaying to build credit. An option is to use a “secured credit card”. You can get one of these from your bank. You put a certain amount of cash on deposit and then use the card just like any other credit card. This type of card is easier to get approved for and you can build credit at the same time. Please make sure to check for fees as well on these cards.

  • Kathleen @ Frugal Portland

    These pre-paid cards are only good for the card companies (and the people who sell them, like Suze Orman). Ugh, it’s so hard to get a leg up if you’re in poverty and this card is one of your only options!

    • LaTisha Styles

      It really doesn’t seem that these are a good option even for budgeting purposes. The fees alone are terrible.

  • Mac Hildebrand

    I hate to think of how many people are instantly approved for a card without going through all the terms and conditions. Thanks for showing the fees and putting it in perspective. I would be frustrated especially at the $1 fee for every purchase.

  • Khaleef Crumbley

    This is very misleading to so many. Thank you for taking the time to unveil these hidden fees.

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