YORKTOWN -- They are a hit with college students and many people looking to watch their personal spending. Pre-paid debit cards are the fastest growing form of electronic payment according to the Federal Reserve. But experts warn you need to be careful. Financial advisors warn against the hidden fees. Right now, there are no laws regulating fees for prepaid debit cards.
"There are many, many different fees and they vary by provider. Some have activation fees. Some have a reload fee," say Jim Craig, Vice President of Marketing for First Advantage Bank in Yorktown.
Craig recommends that you shop around and look for a card with lower fees. He adds the cards have worked well for many consumers.
Once a person puts a certain dollar amount on the card, then that's it. You can't spend any more until more money is put back on. It has been ideal for parents looking to give their college kids a set monthly allowance.
CardHub.com recently released a report on the five most well-known prepaid card issuers. It found Green Dot was the least expensive issuer for using a card as alternative checking account. It also showed both Green Dot and American Express were the least expensive issuer of cards used to give a child a monthly allowance.
To see the full report, click here.