Consumer Reports says prepaid fees coming down

In its first report on the prepaid card industry, Consumers Union, publisher of Consumer Reports, said fees on prepaid cards are dropping, but that fee transparency is still lacking. In its evaluation of 26 prepaid cards, the consumer watchdog found that fee information is still hard for consumers to find. Additionally, some schemes with feature-rich cards fail to provide clear explanations of how to use the features and what fees may be charged for them.

"Not all prepaid cards are created equal," said Michelle Jun, Senior Attorney at Consumers Union. "The good news is that prepaid card fees have come down and a number of cards offer many of the same features you get with a bank account. But consumers can still end up paying more than they bargain for because fees are often poorly disclosed and can pile up quickly."

Consumer Reports based its prepaid card review on four factors:

1. Value: How much cards cost to use
2. Convenience: Availability of in-network ATMs, bill payment features, and how widely the card network brand is accepted
3. Safety: Whether funds are backed by the Federal Deposit Insurance Corp.
4. Disclosures: How well fees are disclosed

Consumer Reports said the best cards of the 26 reviewed scored well in each of the categories, offering fewer fees, checking account comparable features, FDIC insurance and accessible fee disclosures.

The top five cards reviewed by Consumer Reports are:

1. Bluebird (with direct deposit functionality)
2. H&R Block Emerald Card
3. Green Dot Bank-issued prepaid card
4. The Approved Card (with direct deposit)
5. The Approved Card (without direct deposit)

Editorial Note:

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