Eye on Prepaid: Fees Vary Widely, and Millennials More Apt To Favor Prepaid Cards

Prepaid cards may find favor among younger consumers, one survey finds, while another reports prepaid card programs sport a wide range of fees. Also, armored-car company Brink’s has jumped into the prepaid card mix.

Fees on 31 prepaid card programs surveyed by Bankrate.com are scattershot, with the types and amounts varying widely.

All of the programs charge some sort of fee, whether it’s a monthly service charge, activation fee, charges for ATM withdrawals, or point-of-sale fees, Bankrate.com says.

Most of the cards—52%—have no monthly fee or will waive it, usually if the consumer has direct-deposit, automatic loading or links the card to a checking account. That is up slightly from 50% in last year’s survey.

Consumers also might find it cheaper to obtain a prepaid card online. Thirteen percent of the cards charge no activation fee if purchased online, up from 10% in 2014. Many—48%—charge an activation fee ranging from $1.88 to $9.95 when the card is purchased in a store.

ATM fees also vary. Of the 71% of the card programs associated with an ATM network, 68% of these charge no fees for withdrawals made on the network. Thirty-two percent do, with fees ranging from $1 to $2.50 per transaction. This is unchanged from last year.

Notably, fees for using prepaid cards to make purchases at point-of-sale terminals are uncommon, Bankrate.com says. For PIN-based transactions, 77% of the cards charge no fees. That increases to 87% when the consumer makes a signature-based transaction.

In a separate survey, TD Bank found that 25% of consumers either currently use a reloadable prepaid card or have used one in the past three years, with that percentage increasing to 33% among the 18-to-34-year-old segment, the so-called Millennials.

Of the Millennials, 60% of them would consider using a prepaid card compared with 49% for the overall population, TD Bank says.

Security is a primary draw for consumers to use prepaid cards. Among respondents, 85% feel or felt extremely or very secure about their finances and personal information when using a prepaid card.

And, a majority—53%—said using a prepaid card helped keep their personal information private and allowed them to safely make online transactions.

Separately, Brink’s Global Payments LLC, a unit of the Brink’s Co., now offers a general-purpose reloadable card bearing the MasterCard Inc. brand and issued by BofI Federal Bank. Brink’s, which offers other payments services, says NetSpend, a unit of processor Total System Services Inc., is the program manager for the card.