More and more employers are doing away with paychecks, and even direct deposit in some cases, and replacing them with prepaid cards loaded with your after-tax pay.
According to the New York Times, the cards can be a convenience, especially for the estimated 10 million mostly lower-income households that don’t have bank accounts. They typically must cash their paychecks at check-cashing companies. The typical fee is 3 percent or so.
But now employers from Taco Bell to Walgreen to Wal-Mart are offering prepaid cards.
The trouble is, many cards are loaded not just with your pay but with fees, the Times said.
There are fees for using an out-of-network ATM for a cash withdrawal, inactivity fees, fees for balance inquiries, for a purchase using the card, or for replacing a lost one.
Most of the fees are relatively small—from fifty cents to a couple of bucks. But some, such as for overdraft protection, run $25 or so. In total, they can add up.
Bottom line: If you get paid via a prepaid card, know the rules cold.
-Follow Tyler on Twitter @TylerMathisen