The prepaid card industry is notorious for preying on poorer consumers with hidden fees for just about every thing you use it for. There’s even fees for not using them, in the form of inactivity fees. So it’s an unexpected breath of fresh air that American Express is rolling out a new prepaid card with very few fees and a pretty straightforward approach, at least for consumers.

Prepaid cards are a way to load cash onto a card without it being connected to a bank account. They are often used by people who are unable or unwilling to open a bank account, the so-called “unbanked.” Prepaid cards used both so that they don’t have to carry and stash their cash and because so many transactions these days require a card with a magnetic strip.

Of course, AMEX charges higher swipe fees than other cards, so part of the tradeoff for consumers is that it might not be accepted every where.

Also, because the card is not a debit card, it’s not subject to recently passed debit-interchange fee regulation, letting AMEX free to charge merchants higher fees. So, in effect, some of those hidden fees normally associated with this kind of product are getting shifted from the consumer to the merchant.

Here’s the basic stats on these cards:

* No credit check required
* No expiration
* No activation fee
* Can load up to $2,500
* Free to order online
* Will cost $5 if you buy it in a store
* If you want to add funds using cash, you have to go through a multistep “Green Dot Moneypak” procedure with a $4.95 transaction fee
* One free withdrawal per month, after that it’s $2 a pop plus whatever fees the ATM charges
* Funds can be loaded via another AMEX card or a bank account
* A direct deposit option will be added in the next few months

Rather than for poor people, AMEX seems to be marketing the cards more towards people trying to mind their spending by only using cash instead of having that temptation to pay on credit, or for parents who want to give their kids a card while managing how much total can be spent. But it could also be used by the “unbanked,” provided they read the New York Times and have access to the internet.

New American Express Prepaid Card Is Light on Fees [NYT]

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