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Study: ATM fees on the rise for prepaid debit cards

Fees for withdrawals, balance inquiries and declined ATM transactions are more likely to have increased than decreased in the past year, a bankrate.com study says.

April 14, 2015

A new study of 31 prepaid debit cards from prominent issuers has found that, while fees for monthly service, activation and customer service calls have declined over the past year, fees involving the ATM are on the rise.

According to a press release, the survey by Bankrate.com found that fees for withdrawals, balance inquiries and even declined transactions at the ATM are more likely to have increased than decreased in the past year.

"If you do want to supplement your finances with a prepaid debit card, it's best to assess how you plan to use it before choosing a card so that you avoid getting hit with extra fees," said Greg McBride, CFA, chief financial analyst for Bankrate.com.

Key findings from the survey:

• twenty-nine percent of the cards are not associated with an ATM network;
• of those with ATMs, 68 percent do not charge, while 32 percent charge a fee ranging from $1 to $2.50;
• all 31 cards assess a fee (ranging from $1 to $3) for going outside the ATM network;
• eighty-one percent of the cards (up from 77 percent last year) charge a fee ranging from 50 cents to $3 at some or all ATMs;
• thirteen percent (up from 10 percent last year) do not charge for balance inquiries at ATMs and 6 percent do not permit balance inquiries at ATMs;
• only 6 percent of cards offer paper statements at ATMs, and all charge either $1 or $2.50; and
• twenty-three percent of cards charge between 75 cents and $2 for transactions declined at the ATM (up from 10 percent last year).

A separate study conducted recently by TD Bank found that the understanding and use of reloadable prepaid cards is highest among millennials.

According to a press release, the survey additionally found that of those millennials who don't currently use a reloadable prepaid card, 60 percent would consider using one, compared with 49 percent of the overall population. Among boomers (age 55-plus), this percentage drops to 34 percent.

The most popular use is for day-to-day purchases (61 percent), followed by online shopping (56 percent) and discretionary spending (52 percent).

Security is a significant driver in the choice to use reloadable prepaid cards; 85 percent of those who had used a prepaid card said it made them feel extremely or very secure about their finances and personal information.