There are contexts where prepaid debit cards are useful. Consumers without bank accounts who would otherwise deal all in cash use them, and they’re also useful for distributing allowances. The problem with prepaid cards is that they impose high fees for functions like reloading, using out-of-network ATMs, or monthly fees for simply having the card. However, they’re better than they used to be, largely because at least they disclose those fees.

Our colleagues down the hall at Consumer Reports evaluate and rate prepaid cards, and they’ve watched trends in the industry. While you can expect all prepaid cards to come with some kind of fee (they can’t make money by charging you interest, after all) some keep their fees minimal, like the Walmart/American Express Bluebird card with no monthly fee, or Chase’s Liquid Visa which charges a $5 monthly fee. Neither card charges for use of in-network ATMs.

What has made the biggest difference is increased transparency from card issuers. The cards themselves haven’t changed much overall, with some companies still imposing high fees on essential functions. Users didn’t expect to be charged fees per transaction, for example, or to reload their cards. Greater transparency means customers can choose the right card for them, as long as they read the fees carefully and know their options.

Prepaid Card Buying Guide [Consumer Reports]

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