One great attraction about prepaid debit cards is that you don’t have to worry about interest rates. Since you are not given a credit line and you pay for your bills using the available cash you deposited, you will not incur additional APR costs.

Nevertheless, owners of debit cards must be cautious about the possible penalty fees associated with their prepaid card use. What you thought was a $50 worth of purchase may suddenly cost you $80 or more due to the extra costs. What are these penalty charges?

Below is a list of debit card fees to watch out for:

Negative Balance Penalty. You can only use your debit card for payment as long as you have an available balance in your account. However, there are instances when your bill may exceed just a little over your available balance. In this case, your transaction may still be accepted but you will be charged with a penalty fee.

Decline Charge. Again, prepaid debit card holders are not allowed to overdraw. Hence, if you try to make a purchase that is way too large than your available balance, your transaction will usually be declined and you will be penalized for trying.

Daily Limit Penalty. Some prepaid debit card issuers impose a limit to the amount of transaction you can make each day. Going beyond that could mean additional penalty fees.

Inactivity Fee. Not using your debit card within a specified time period may also cost you additional charges.

Customer Service Charge. Some Issuers may not provide assistance for free. Other may provide one free live customer call each month but may charge a fee for corresponding calls (may range from $0.50-$2.00 per call) So before calling your debit card’s hotline number, check how much you will be charged.

Account Termination Penalty. Are you planning to close your account? If yes, your debit card Issuer may penalize you for terminating their service ($15 or more).

Card replacement. If you lose your debit card, there is usually a fee to ask for a replacement card. Visa and MasterCard may charge you $10 for this.

ATM Balance Inquiry. Do you want to inquire your balance? Watch out! Checking from your nearest ATM may cost you anywhere from $0.50 to $1.00, depending on your debit card type.

Currency Conversion. Currency conversion rates are not just applicable to regular credit cards but to prepaid debit cards as well. Hence, before using your prepaid card abroad, check the currency conversion rate. For instance, Visa Prepaid Debit Card charges 2% while MasterCard Debit Card charges 2.95% currency conversion rate from the total amount of purchase.

Choose and Use Your Debit Card Wisely

Just as it is important to check the fine print before signing for a credit card, you also need to do some investigation when choosing a debit card. More importantly, you need to familiarize yourself with your privileges and limitations to avoid spending more on penalty and maintenance debit card fees. Even though it is far easier to get a debit card, take the extra effort to read the Terms and Conditions.

About the Author

Tara Tiemann is a credit analyst for Go-prepaid.com which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards,prepaid credit cards and prepaid cell phone service can save you big money!