In case you missed it, T-Mobile announced yesterday that it is entering into the rapidly expanding prepaid card industry by offering a prepaid card, called “Mobile Money.” According to the Washington Post, “T-Mobile will help you cash your checks: how it works” Tmobile is offering a prepaid Visa card, and T-Mobile customers will be able to load money on the card through an app on their phones.
On its website, it says that for existing Tmobile customers who chose to use the card, it won’t charge fees for purchases, reloading in a T-Mobile store, no maintenance fees, and no withdrawal fees at in-network ATMs. It also says that there are “other ways” to avoid these fees for non-Tmobile customers, but doesn’t spell out how customers can avoid these fees.
1) Money on a prepaid card is NOT required to be insured by the FDIC
2) Prepaid cards are not required to offer the same protections against theft or fraud as bank issued debit cards
3) Fees, fees, fees:
- There is no limit on the fees banks can charge merchants to process payments using prepaid cards.
- Fees are not standardized, making comparison shopping difficult for the consumer
- Fees are often unclear to the consumer and can range from everything to a monthly fee, a fee to load the card, a fee to use it at an ATM, balance inquiry fees, and even monthly inactivity fees.
As a guest blogger from the Game Theory Academy point out last week, No Transparency with Prepaid Cards: A GTA Student Perspective, there are fewer protections for consumers with prepaid cards.
The California Reinvestment Coalition, which has long advocated for banks to offer low-cost, accessible checking accounts, will continue to monitor the pre-paid card industry closely, and will continue our call for increased transparency and consumer protections with these cards.