How steep are the fees on pre-paid debit cards?

Explosive growth in the pre-paid debit card market has drastically improved consumer options, with an increasing number of low-cost cards offering simple and transparent terms, according to a new survey by BankRate.com.

The change from years past couldn't be more dramatic. The industry, which traditionally catered to people who couldn't or wouldn't open traditional bank accounts, used to be a wasteland of high costs and hidden fees. But over the past few years, big banks and credit card issuers have entered the market with cards that mimic low-cost checking accounts, said Greg McBride, chief financial analyst with BankRate.

American Express' Bluebird card, for example, is free to use for those with direct deposit. Consumers who prefer to load their cards in other ways get charged ATM withdrawal fees. The Chase Liquid card, meanwhile, charges a $4.95 monthly fee, but nothing else as long as the customer stays within the Chase ATM network.

Monthly fees are charged by 83 percent of the surveyed card issuers, but a significant portion of those issuers will waive the fee for those that load more than a set amount onto the card each month or that participate in direct deposit programs.

More than half of the issuers have "activation" fees, but 10 percent don't charge the fee if you buy the card online or over the phone. Two-thirds allow free ATM withdrawals, as long as the consumer remains within the card-issuer's network. Those who stray outside of the network get hit with fees ranging from $2 to $3 per withdrawal, much like non-network ATM fees for traditional bank customers.

Still, numerous pre-paid card issuers continue to hit consumers with a range of niggling charges:

  • 17 percent charge a fee for pin-based point-of-sale transactions, according to the survey. These fees range from 95 cents to $2.
  • 7 percent charge for signature-based point-of-sale transactions, with an average fee of $1.
  • 77 percent charge a fee if you want to see your card balance at an ATM. Fees range from 45 cents to $3.
  • 53 percent will charge if you want a monthly statement by mail. This fee ranges from $1 to $5.95
  • 27 percent charge for calls to customer service.
  • 10 percent charge if you attempt to get money out of an ATM but don't have the funds to do so. This fee ranges from $1 to $2.
  • 17 percent charge for for not using your card. These "inactivity" charges range from $1.95 to $5.95.