As the average household debt is an all-time high in the US, consumers really need to think prudently before taking a loan and falling into the vicious spiral of debt. However, the bulwark to their prudence seems to be the offers made by debit card companies.
The prepaid debit cards come in handy in situations where money is required on an urgent basis. The advantage of such cards is that they can be refilled easily. No wonder the popularity of prepaid debit cards has consistently been high. Some even argued that prepaid debit cards are the best way to avoid debt. More so because a study done by Pew Charitable Trust showed debit card users have previously used conventional financial services.
Problem is, prepaid debit cards have other flip sides. One of them is hidden charges. A website called bankrate.com analyzed 30 different prepaid debit cards and found multiple fees to be associated with almost all of them. Such fees are monthly maintenance fees, card activation fees, and fees on ATM withdrawals and balance inquiries.
The difference between these fees is that some are small while others are big and burdensome. The trend seems to be keeping the fees low when a company is entering into the market; but as soon as it makes a brand name, it tends to increase the fees and to the anguish of customers, federal disclosure regulations don’t apply to prepaid cards. This allows companies to keep the real charges out of sight.
Cardholders, as a result, end up paying more, sometimes way more than what they are supposed to pay. When cardholders inform the companies about the hidden charges, the customer service department disconnects their call or put them on waiting for so long that they themselves end the call. Majority of customers don’t complain to the Consumer Financial Protection Bureau as they consider it trivial.
Regulatory authority needs to monitor the extra charges. When a prepaid debit cards customer receives a monthly statement by mail, a service fee is attached and more than 50% prepaid debit card companies charge up to $6 for each statement. Activation fee is another cliche that normally cost from $3 to $8.
Some consumers have become so pissed with the extra fees that they have thought of discontinuing the prepaid debit card and moving back to traditional methods. A person called Gail Fiorentino said, “You have to watch for the fees and you have to pay extra for them so sometimes you wonder if they’re worth it…”
There are plenty of other customers with the same question in mind. It’s best for debit card companies to regain their trust before customers discard using the cards and before the regulatory agencies take steps.