WASHINGTON, Oct. 6 (UPI) -- Prepaid debit cards available at U.S. retail stores are not quite the care-free banking products advertisements portray, a consumer advocate said.
The cards, available to those who do not qualify for credit cards or even for checking accounts, are stacked with fees, many in fine print, The New York Times reported Tuesday.
When the fees are added in, "it's a very expensive way to bank," Jean Ann Fox, director of financial services at the Consumer Federation of America told the Times.
One card, the MiCash Prepaid MasterCard includes a $9.95 activation fee and a $1.75 fee for an ATM withdrawal. It costs $1 to check on a card's balance, half a dollar per purchase, $4 for a monthly maintenance free, and $1 to call the card's customer service department, the Times said.
Gary Palmer, chairman of the Network Branded Prepaid Card Association, said, "many consumers have found (prepaid cards) can be far less expensive," than a checking account.
Mercator Advisory Group said the unregulated business is growing.
In 2008, use of prepaid cards jumped 125 percent to about $8.7 billion. Mercator forecasts the business will grow to $119 billion a year by 2012, the newspaper said.
