Banks charge prepaid cardholders for using their own money

The logical explanation that was given to those who wished to opt for a prepaid card was that the cards will help them save money when compared to the conventional checking accounts due to the potential overdraft fees etc. However, with the prepaid cards there are more disadvantages than advantages. Here, you cannot use them to build your credit history for one thing. Apart from that, you cannot build your credit score or even avoid the fees the banks charge. You will also not be able to manage your finances, so you can spend wisely.

So, when you consider all these factors, the only beneficiaries are the financial institutions that issue these cards. The fees that are charged amounts to the same as other accounts and at times even more when compared to conventional checking accounts.

You could take a look at the Mango Card available now, where you will be entitled to a measly $20 as one-time bonus if you enroll in direct deposit. This is nothing when compared to what the issuer will get to save over a period of time, since they will be charging you at least $2 for every ATM withdrawal and another $4.95 if you deposit cash via a third party. For every balance enquiry, you will be paying another 50 cents.

Since your savings account is linked to the Mango card, you will get a reimbursement of $5-monthly fee only if you add a minimum of $500 every month. This really means nothing because you will be charged the reload fee in any case. There is also a huge catch on the 6% yield that is promised on the savings account. It is meant only for balances below $5,000 and is a teaser rate and won’t last for long. If you have more than $5,000 by way of deposit, the rate is 0.10%.