While prepaid cards may benefit a person who doesn’t qualify for a credit card, you should understand there are numerous types of fees connected with them. If you want low fees, stay with a debit card.
Should you use a prepaid card?
Only two good reasons exist for using a prepaid card, according to CardHub.com’s Prepaid Cards Report for 2011.
One is as an alternate to a checking account; the other is for managing a child’s allowance.
Odysseas Papadimitriou, CEO of CardHub, advises: “If it’s not being used for one of these two reasons, you are probably spending too much money for something you could get for less.” 
Fees and features
Of the fees, Papadimitriou says, “Certain prepaid cards charge many different fees in an attempt to disguise the true cost of using the card. If a card as 20 different fees, it is confusing for a customer to figure out how much a card will actually cost them.” He believes the new Consumer Financial Protection Bureau, or CFPB, should limit the number and amount of fees prepaid card issuers charge their cardholders.
The prepaid card business is one of the fastest-growing forms of electronic payment, according to the Federal Reserve. Cards feature guaranteed approval – you’re not asking for any credit, hence no interest cost – and many cards have attractive features like special discount cards for prescription drugs, and free online bill payment and check writing. Most have free direct deposit and bank account transfer features so you don’t get stuck with a charge for funding your card. You basically pay a fee for the convenience of using plastic. Prepaid cards aren’t credit cards and the use of them has no affect on your credit score.
However, you should read the fine print. Check items such as activation fees, monthly maintenance fees, and ATM use fees. Note that you may be charged both an ATM withdrawal fee and also an ATM surcharge each time you make a withdrawal from a non-network ATM machine. In addition, there may be customer service fees, balance inquiry or transaction history fees, bill payment fees, transfer fees, card replacement, pre-authorized payment, electronic payment and other fees.
How some prepaid cards compare
CardHub’s Prepaid Cards Report rates five of the top-rated prepaid cards as to both their fees and their features.
This included GreenDot, NetSpend, AccountNow, American Express, and Capital One.
Of the card issuers:
- GreenDot had the lowest fees for use both as an alternative checking account and for giving a child an allowance.
- NetSpend turned out to have the highest fees either way, plus it charged a lot of other fees.
- AccountNow was the second most expensive and Capital One the third most expensive card.
- American Express didn’t offer use as an alternative checking account, but it was competitive for use as a child’s allowance. 
Final word – consider the total price for the use of these cards before picking one!