Prepaid debit cards: banks gain is customers loss

The Wall Street Journal points out in an article today (Banks Pin Revenue Hopes on Prepaid Cards) why prepaid (non-gift) cards are a bad idea for consumers.

Prepaid cards carry the same interchange rates as debit cards, typically 0.75% to 1.25% of each transaction. So if banks lose some of the debit-card fees, they hope to regain them through increased prepaid-card use.

Because these cards are not covered by either the new gift card laws put out by the Federal Reserve, or the new laws regarding debit card fees, banks are free to charge what fees they want and apparently plan to make up lost revenue through these cards, which is sure to be a bad deal for consumers.