Revealing The Hidden Cost Of PrePaid Debit Cards

With credit cards harder to come by and more annoying to use, the prepaid debit card market is projected to explode from $8.7 billion loaded on the cards to $119 billion in 2012, but a good chunk of that is going to be eaten up by hidden fees and gotchas. This sexy graphic visualization shows how.

Fees like:
$1.75 for each ATM withdrawal
$1 for each ATM balance inquiry
$.50 for each purchase
$4 monthly maintenance charge

Prepaid debit cards are a way for people who can’t or won’t get a banking account to do ATM withdrawals, make purchases online and to buy stuff without carrying cash around. But the hidden fees and sparse regulation can mean the unbanked get jacked once again.

The real cost of prepaid debit cards [FST] (Graphic by GDS Digital)


Edit Your Comment

  1. Brazell says:

    I get a dozen credit card offers a month… if anybody wants some of mine, I’d be happy to give them away. These are like rollover minutes right?

  2. Nakko says:

    Hey they’re just making it easy for us to make donations to their bottom line!

  3. NeverLetMeDown says:

    That graphic is awful. The pseudo-3D view makes it incredibly difficult to actually compare column heights, columns of similar height and size reflect entirely different things (total $ issued vs. fees vs. # of transactions), etc.

    Four simple excel charts would have been much much more useful.

    • veg-o-matic says:

      @NeverLetMeDown: I was thinking pretty much the same thing.

      I occasionally teach my students about the uses and abuses of visuals; this particular visual would serve nicely as a “what not to do.”

    • shepd says:


      It’s also not even close to scale.

      $119 billion is more than 13 times larger than $8.7 billion, yet the graphic appears to represent $20 billion at most.

      (The pink boxes labelled “Size of Prepaid Market”).

    • BabyFirefly says:

      @NeverLetMeDown: Agreed. It’s harder to read.

    • Ginseng108 says:

      @NeverLetMeDown: Agreed. WWETD? Edward Tufte wouldn’t have much positive to say about that graphic.

      • NeverLetMeDown says:


        Tufte rocks.

        The story behind VDQI is pretty excellent too. He couldn’t get a major publisher to take it on, since they said that, in order to meet his requirements for look and feel (printing quality, paper quality, etc.), the printing costs would be so high that the book would be unprofitable.

        He mortgaged his house and self-published it. Made him a wealthy man. The “Graphics Press” that publishes his book is run essentially out of his garage.

  4. madanthony says:

    The chart would be hella more useful if it told you how they calculated what an “average” 2 months of use is. It would also be useful if you knew if there were ways around those fees – for example, if it charges you a fee to check your balance at an ATM, but you can check it for free some other way, like online or by phone, it’s not quite as bad since the fee is avoidable.

    I do a lot of rebates, and a lot of vendors use these instead of checks nowadays. I usually use them immediately to buy a Target gift card, before the inactivity fees kick in and so I don’t have to keep track of how many cents are left on them.

  5. greg7079 says:

    The answer is simple, don’t get a debit/checking account with a major bank. Use your local bank and when you travel carry cash and if this scares you (you don’t want to be mugged) conceal it in your sock or something. It is my personal opinion that all major banks should be boycotted. Our founding fathers knew this, how come we don’t!

  6. oblivious87 says:

    I really don’t understand why people don’t open up checking accounts. I have 2 of them and both don’t have any fees. One required a direct deposit every month or 4 debit card purchases otherwise you’d pay a $8 service fee.

    I don’t have to pay atm fees or a fee when making a purchase. So why is it that people will simply deposit their paychecks onto these things when they could put it into a checking account?

    • bloggerX says:

      @oblivious87: Some people can’t get a checking account because of their credit. More banks have been looking at that now.

      • pop top says:

        @bloggerX: Others also don’t want one because they are trying to skip out on child support payments, liens or other types of wage garnishments. Some are just afraid of the government and won’t put their money in anything remotely connected to it.

      • jamar0303 says:

        @bloggerX: … I have a blank credit report due to me not having any credit lines. If they’re looking at that for checking accounts I may end up continuing to use my Chinese bank accounts even after I move back to the US. At least, until the credit market loosens up.
        … Why are checking accounts so expensive to maintain in the US anyway? Seriously, Citibank US charges US$8/month if your balance isn’t high enough for them. Citibank China only charges US$1.70-something *annually* for low-balance accounts. And it’s waived the first year. Only downside is no online transactions with most non-Chinese retailers (PayPal works around that though I keep a separate account to link to that due to the horror stories).

        • bloggerX says:

          @jamar0303: You can find some bank accounts that are absolutely free-no minium balance or needing to use a debit card a certain times a month types, they usually are at credit unions.

          Yes, I’d say 90% of US banks are fee-draining vampires!

  7. temporaryerror says:

    Based on my debit card usage in October, I would have been charged $23.25. Why would a person be unable to get a bank account other than owing another bank money?

  8. Ronin-Democrat says:

    we americans are financially incompetent.

    between inefficient check cashing and prepaid debit cards and bank debit cards we deserve o be in the fix we’re in.

    get a checking via credit union or bank account. pick on either near your home or your job.
    do direct deposit
    learn to use your credit card like free cash by paying your monthly bills with it.

    make one electronic payment a month in full to the card company.


    put yourself on a cash allowance for the month.
    take it all out in one withdrawal and spend as you want but don’t go back to the atm no matter what

    review your credit card bills to see where you “wasste” money like jamba juice 4 times a week on a low wage salary.

    live within your means but don’t be afraid to enjoy life either.

    don’t get caught in the christmas, birthday gift trap of costly is better.

  9. vastrightwing says:

    I hate banks. So I understand it when I wait in line @ the post office while some guy is paying all his bills using money orders.

  10. coren says:

    I’d be interested in seeing what California (and other states with similar laws) had to say about “maintenance fees” on these type of cards – are they treated at all like gift cards?

  11. NewsMuncher says:

    when the graphic is expanded, it’s underneath the side advertisement, so you cannot see some of the labeling.

  12. triumph110 says:

    Whats wrong with good old cash?

    • Kimaroo - 100% Pure Natural Kitteh says:

      @triumph110: Can’t shop online with it
      Once it’s lost/stolen it’s gone
      Can’t pay rent with it (My complex doesn’t accept cash)
      It’s icky (Seriously, look it up.)
      Can’t send it in the mail (Or you’d be stupid to do so.)

      I’m sure there are other reasons.. but those are just off the top of my head.

  13. zacox says:

    Just say NO!

  14. huatianjiudi says:

    The stupid Consumer Reports ad will not close so I cannot see the embiggened graph… stop placing annoying ads

  15. katia802 says:

    I use one of these for online purchases, anything that requires a credit card. After the “lovely” experiences I had with the ex and my credit cards, I’ll never willingly have another one. This works just as well for online, and if someone manages to get ahold of my number, not much they can do with it, as I only put on the amount I plan to spend right away. They have their uses, yeah, they’re abusive to folks without bank accounts, but I don’t see much alternative out there. Perhaps the people on here who are always holier than thou my credit is perfect and yours should be too should start their own service with fair fees. That’d allow the rest of us to enjoy our time on consumerist.

  16. ChuckECheese says:

    Once upon a time I was doing temp work in a temp city w/ no direct deposit and I wouldn’t have easy access to my out of town checking account. The local banks were all charging fees for no minimum balance checking accounts. And were I to get one of these accounts, they would hold my paychecks for up to 11 days before I’d have access to more than $100.

    So for awhile I had one of those Walmart Money Cards. It cost $3 a month and $3 to deposit my paychecks in it. You can’t overdraw it and so there are no overdraft fees. It cost me $6 – $9 a month to use. I could look up my balances online or by phone for free. When my balance got over a grand, they stopped charging monthly fees.

    On the other hand, I had to go to Walmart to do my banking, and the online card statements were difficult to make sense of. And human customer support was nil. Overall it was pretty good.

  17. zzxx says:

    Let’s put this industry out of business and not use this crap.

    The thinking behind this is innovative. Why can’t innovative thinking be used to create something, manufacture it, and sell it to the world. That is why this country is taking a hike.

  18. thinksojoe says:

    I have a card through Green Dot, and my reason is simple. When I was younger, I was financially irresponsible and am currently unable to get an actual bank account. At first, the fees were ridiculous – 75 cents to check your balance by ATM or telephone (free online), $4.95 a month regardless of your balance, and something like a $2.50 ATM fee.

    Recently, they’ve changed their fee structure. You are no longer charged for checking your balance by any means, and if you make 30 purchases or load over $1000 over the course of a month, they waive the $4.95 monthly fee as well. Now if they’d just get rid of that pesky ATM fee…

  19. Daddy-o says:

    I can’t understand why anyone uses a debit card. Pay with a credit card, and the money isn’t withdrawn from your bank account until the due date of your next statement. And so long as you pay your bill on time, in full, you need never pay any fees. Debit cards have so many hoops and gotchas…and no opportunity to plan your cash flow, since the cash is withdrawn immediately.

    If you’re someone whose credit report allows no other choice, or if you need the discipline of an available bank balance, a debit card may be your only option. For the majority, a debit card is simply a dumb idea. And if you own a retail business, a debit card means money down the drain.