Are Prepaid Debit Cards Loaded With Land Mines?

My children HATE Visa Gift Cards because they always seem to have issues at the register buying items with them. Paypal has a prepaid card that only has the amount on it that you put there from one of your bank accounts. It also pays back a small amount each time you use it. You can also click on the feature to have it - or have it not - access another account for overdraft. I know it is not the anonymous prepaid card the article was referring to - but I do think it would be a good one to take traveling.

I believe paypal has discontinued their prepaid card.

Pre-paids are probably only worth the extra fees and hassles for people who have recently screwed up their financial lives and can't get a real bank account. As you have pointed out before, Frank, even teens can have checking accounts, and these are easily monitored by parents stateside. I would suspect that a lost debit card tied to an account would be replaced easier than a pre-paid card, although I don't know that for sure. I just am suspicious of the pre-paids. They are less likely to have the full support of your home bank. On a related topic, a lot of people here will say that their bank does not charge them for overseas atm transactions. That may still be true, but more banks are adding or increasing fees. You should check before you go. One universal truth-the banks will get their money.

There are some prepaid cards that are issued by credit unions (and presumably banks, though I only deal with credit unions). At my credit union they are called Visa Passport cards. They are supported by Visa and might not create as big a concern regarding fees and such as a generic prepaid debit card. The fee for this card seems lower than those I have seen reported for the other kind of prepaid debit card, though I haven't used one, since it's no benefit to me over my regular ATM card.

Like Patty, my children have been given these prepaid cards as gifts and they have struggled repeatedly when trying to get them to work at store cash registers. On several occasions they have been treated like they were trying to overdraw on an account when there was plenty of money available. Cards that won't work in one store are fine in the next. The last thing I'd ever do is send my child to Europe with a card that may or may not work. My kids hate them, too.

But isn't that the point, Nancy. If you credit union provides a fee free debit card why would anyone consider prepaid debit card with fees. Except, of course, for those who have no choice because they cannot have access to a debit card account. Which I find a little hard to believe.

Frank, I agree it makes no sense for someone who has a regular debit card account. But there are people in this world, as a previous poster has mentioned, that do not have a banking relationship anywhere. Some people can't get accounts because of previous credit problems or checking account problems at other places. Hard to believe or not, it's just the way it is. Obviously I would never use a prepaid card. I was just mentioning that they do exist at other places than the Money Center at Walmart, and can have lower fees than those available at such places.