When it comes to prepaid debit cards, there are good ones and bad ones. That's according to Consumer Reports magazine, which recently released its first-ever list that ranks 26 prepaid cards according to convenience, cost, safety and how well fees are disclosed.
What it found: a number of prepaid cards have lowered their fees but the information is often hard to find. And some prepaid cards still lack the safeguards that consumers get with traditional debit cards, such as FDIC insurance and coverage for loss from fraud.
"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," said Michelle Jun, senior attorney with Consumers Union, the magazine's policy arm, in a statement. "But consumers can still end up paying more than they bargain for because fees are often poorly disclosed and can pile up quickly."
All of the low-scoring cards have high, unavoidable fees, including activation and monthly charges.
Among the worst cards: American Express for Target prepaid card, Account Now Prepaid Gold Visa (Meta Bank), The REACH Card from Tom Joyner and the Redpack Mi Promesa Prepaid MasterCard.
The best cards have fewer fees, do a better job of disclosing fees; carry FDIC insurance; and offer features comparable to traditional checking accounts.
They include: The Bluebird card with direct deposit; H&R Block Emerald Card; Green Dot Bank Issued Prepaid card; Approved card with direct deposit; and the Approved Card without direct deposit.
Consumer Reports urges consumers to be careful when choosing and buying a prepaid debit card.