Beware of pre-paid debit cards that look like gift cards

Some gift cards might charge extra fees.

As the holidays approach, many of you will be buying gift cards for friends and family. But a warning: some of them have fees attached.

You must look closely at the packaging. In some cases, it says in very small print, "This is not a gift card."

When you go to the store, there will be several choices. You can get the traditional store gift card or a Visa, Master card, or American Express gift card.

If you look closely, there is also a "pre-paid" re-loadable version.  Those are the ones to beware of. 
Often, you have to activate the card by creating an account, and that requires giving the bank your personal information.  

Matt Schulz, senior industry analyst from creditcards.com says, “If you get a pre-paid debit card, it's important to know that you can have a monthly fee for putting money on that card or a fee for withdrawing money from an ATM, or inactivity fees.”

For example, a pre-paid debit card that sits for a few months can depreciate.  It may start out $50, but by the time you use it, it might only be worth $44. In addition, there is a $2-dollar fee for every transaction.

Some people choose to use pre-paid debit cards because they can re-load them and use them to pay bills. But, if it’s for a birthday or holiday gift, the best advice is to go with a gift card. 

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