I've reviewed several kinds of prepaid cards and the best advice is, review the list of fees carefully!
The bottom line here, it's nothing more than a sales tactic to get your money! They aren't selling enough high fee cards so now they are just randomly sending them to people hoping we'll activate them and they'll get the fee. It's nothing more than your name was put on a mailing list as someone who is likely to purchase something from a mail solicitation. As soon as you add money to the card, they will take out a $9.95 fee for sending you the card. Then when you use a PIN to make a purchase you will be charged a $2 fee per transaction, if you sign, you will be charged a $1 fee. To avoid these fees, you will have to pay a $9.95 monthly fee, but you have to select the monthly plan online, otherwise make 10 PIN transactions and they'll take $20 in fees from your account. My favorite fee is the $5.95 account maintenance fee. If you have no activity for 90 days, they charge you for holding on to your money for you! Signature Purchase Convenience Fee $1.00
PIN Purchase Convenience Fee $2.00
[color="Red"]Card Fulfillment (Shipping & Handling) $9.95[/color]
Monthly Service Fee $9.95, billed on cardholder's cycle date
Signature Purchase Convenience Fee FREE
Account-to-Account Transfer -- Via Toll Free Number $4.95
Check or Additional Statement Mailing Fee $5.95
Lost or Stolen Card Replacement Fee Up to $9.95
Account Maintenance (waived if account has debit or credit transaction and/or balance inquiry within 90 days) $5.95 per month
As far as freezing an account, here is a possible reason. All prepaid cards have this disclaimer:
The USA Patriot act is a Federal law that requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. You will be asked to provide your name, address, date of birth, and other information that will allow us to identify you. You may also be asked to provide documentation as proof of identification. Approval of your prepaid card application is contingent upon successfully passing this mandatory identification confirmation
For example, people would go to a drug store, buy a Greendot card, load it with cash, then go online to activate it. You are required to provide your correct information including address, phone# and SS#. People trying to hide their identity would provide false information. While they don't do a hard pull of your credit file, the government wants to know that you aren't using your card to purchase explosives, supplies to manufacture illegal drugs or hide from the law. Guys would hide money on these cards to avoid paying child support or criminals could easily hide their cash. If you get caught providing false information, your account will be frozen and this does include providing false information to get a second card. This is a federal law to try to stop these activities
If you really want a prepaid, compare cards and fees. Cards like Capital One Prepaid will waive your $4.95 monthly fee if you deposit $500 each month, Greendot waives your monthly fee if you make 30 transactions per month, Vision Primer requires direct deposit from your employer to waive your monthly fee. The UpSide Visa card only charges a $2.95 monthly fee. Watch how the card is loaded, some allow you to add extra money via ACH from a bank account or PayPal for free! If you are required to use Greendot moneypacks, Western Union, PreCash, etc. there will be a charge to add money. It gets complicated too because I found a card that accepts free Wire deposits from a bank account.....my bank charges $45 to send a wire deposit. Most cards will allow you to view your statements online and contact customer service for free via email. With Capital One, you get one free ATM withdraw and one free call to customer service per month.
One thing I have learned, prepaid cards have been mislabeled as credit cards. Credit implies you are using the lender's money. With prepaid, you use your own money and your card will only be approved for the amount you have already put on the card. Debit cards are connected to a checking account and you can overdraft a checking account. When you receive a prepaid card, it says right in the cardholder agreement, you are not being extended credit and this is NOT a checking account. Because it's re-loadable, it's not a giftcard either. Credit Cards charge interest, over the limit fees and late fees. My local bank has a debit card with a $200 daily limit, spend $200.01 and they will charge you a $35 fee for exceeding your daily limit. Prepaid can't charge interest, late fees or overdraft fees, so they charge a monthly fee making them seem like a ripoff. Some cards have lowered their fees to be more competitive, while others have hidden their fees making them seem like more of a ripoff -- if you don't read carefully, you might put $200 on your card, spend $75 then find you are out of money, it's happened to more than a few people. I forgot which card it is, but they do charge a $49 fee to activate your card. Usually what happens is people get the cards, realize they've been ripped off and throw the cards away, by then it's too late, the card company already has your money and you don't get it back. I don't know of any prepaid cards that don't charge fees, some kind of fees.
I don't promote any prepaid card. Here's my suggestion, google Capital One prepaid MasterCard, UpSide Visa card, nFinanSe Visa card, Greendot Visa card and ing direct. Pay close attention to all the fees and reload options. Daily spending limits are another thing, you don't want a card that only lets you spend $200 per day.