Prepaid debit cards have really taken on in the US.
They're popular both as gifts for teens and as a way to contain was card spend. Their use has ballooned as more consumers look for alternatives to high bank fees on traditional cards. The convenience makes then attractive. The money is protected if you lose the card. And, parents like them for kids who are not yet ready for credit cards.
"Surprisingly in 2011, 409 billion dollars was uploaded on prepaid debit cards. It was actually the fastest growing transaction method with 35 percent growth," says MyBankTracker co-founder Alex Matjanc.
And you don't need a bank account to own one. It is why they're increasingly popular with what's known as the unbanked. Seventeen million Americans do not have bank accounts, and that makes then not eligible for traditional credit cards.
Now here is the catch. People often assume prepaid cards are cheaper because they don't involve bank fees. The devil is always in the detail – in this case in the fine print.
Some prepaid cards come with their own fees, a monthly service fee, ATM fees and a fee every time the card is reloaded.
Active users can find that their card fees begin to stack up.
So before you jump on the bandwagon check out the fees.
