Prepaid cards are an alternative to debit and credit cards. They differ in many ways, but the most significant difference is that you load them with a set amount of money before using them. Prepaid cards are growing in popularity among people without bank accounts and those trying to better manage their spending. Recently, the nonprofit group Consumer Action compared 28 prepaid cards from 11 different financial institutions to help consumers make the right choice. For a copy of the survey and an educational booklet, go to www.consumer-action.org/prepaid.
Consumer Action’s key shopping recommendations are: 1) Choose a consumer-friendly card with fraud protection and free customer service; 2) Choose a card that fits with how you plan to use it (e.g., some cards add a fee for every transaction); 3) Adjust your buying habits to avoid as many fees as possible (e.g., if checking your balance online is free, don’t check it at the ATM).