Debit Card

• Convenience of not carrying cash
• Benefit of not incurring debt
• Protection against online identity theft
• A way of protecting credit card numbers

Examine The Fees

It is important to examine the fees that might be subtracted from the account balance. Most consumers are familiar with monthly maintenance fees on a checking account or an automatic membership charge deducted by a credit card company. However, few are aware of the many extra fees attached to a prepaid debit card. Additional charges are applied to every deposit, purchase and withdrawal the cardholder makes.

Debit Card Deposits

Deposits are referred to as ‘loads’. In most cases each time there is a ‘load’ transaction the bank assesses a processing free.

Direct Payroll Deposit

Most issuing banks reward customers who directly deposit their payroll check onto their debit card. The term “free direct deposit” is often misinterpreted. In most cases, it applies only when a pre-designated paycheck is automatically deposited.

Transaction Charges

Unless the cardholder participates in a special program (see below), their account is charged a transaction fee every time they make a purchase. The fee amount is based on the way the card is used.

Signature

The signature transaction mirrors a credit card sale where a receipt is presented for the cardholder to sign. This fee is encouraged by banks that issue debit cards. Their reasoning is that it is easier to process these transactions. Although they are less expensive than pin fees, signature transactions are less secure for the debit cardholder.

Pin Fee

Most consumers are familiar with pin transactions. Private security code numbers, or pin numbers, are used at ATMs everywhere. Customers can swipe a debit card and input their pin number to complete the sale at many retail stores. The pin fee is often double the cost of a signature transaction.

Card And Activation Fee

A card fee averages $9.95. If there is no mention of a “card” fee, it is provided as part of the activation fee. These range from $9.95 to $19.95. Activation charges cover the initial costs of processing and issuing the debit card. If there is no mention of either fee; read the terms of service extra carefully. The bank must make a profit, and there will be a cost to the cardholder one way or another.

Special Programs

The option of paying additional charges to join a plus plan or award program is worth investigating. For example, All-Access Visa cardholders can opt for Plan 2. They are assessed a monthly fee of $9.95. On this plan, there are no pin or signature fees and members are allowed unlimited transactions.

Prime Mutual

There is no mention of card or activation fees on Prime Mutual’s website. However, there is an interesting surprise tucked away in the terms of service. All new customers are assessed the following charges.

• Application fee: $59.95
• Processing fee: $90
• Minimum balance: $10

Charting Different Debit Cards

The chart below examines the fees of five randomly chosen debit cards. An attempt tocompare cards across the seven categories highlights the difficulty any consumer has in making an educated choice.

If the information was absent, unclear, or contradictory, a question mark appears in the box.

Summary

Before choosing a prepaid debit-type card, talk to your local bank. Chances are you can get a card attached to your own bank account with fewer fees -- many may only charge as little as a dollar per transaction. You may also be able to use the card the same as a credit card, provided you have the money in the bank, and avoid all transaction fees. Your banker can provide you with the best advice on this process.

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