Prepaid debit cards, which are cards for individuals without a bank or credit union, have been a frequent subject of recent financial news stories. Unlike a standard debit card, these cards are not connected to a bank account. Instead, the holder loads money onto the card as he or she sees fit.  Many unbanked consumers in the United States are already using a prepaid card for their purchases, and they do offer several different benefits.

For example, these cards are safer than cash because they offer more protection from burglary. Because they can be processed like a standard debit card or credit card, prepaid debit cards can be used for most purchases. A pre paid debit card also protects users from going into debt because it is impossible to spend more than the card holds. Finally, these cards require no credit check, and paychecks or government benefits can be direct deposited onto the card without a fee.

In spite of these benefits, however, critics warn that these cards will do more harm than good. Many of prepaid cards are overrun with fees, which decrease the card’s balance over time. Though each fee is relatively small, they eventually add up to an amount many consumers would not want to pay. A prepaid debit card may carry ATM withdrawal fees, charges for loading the card, a fee for opening the card, and a yearly or monthly fee for simply having the card in your possession.

A new prepaid debit card, sponsored by financial expert Suze Orman, claims to carry more modest fees than the other brands. This card, called “Approved”, will cost consumers only $3 to purchase and $3 per month for use. The Approved card will also be sending usage information to TransUnion, one of the major credit bureaus, in hopes of finding a way to use debit card activity to alter consumer credit scores. Orman promises that the fees on this card will never increase. She also states that she hopes to lower the fees or eliminate them altogether. Nonetheless, consumers should be cautious with any prepaid card.

According to financial analysts, the current state of the economy will cause prepaid debit cards to grow in popularity even more in coming years. However, consumers of these cards should research their cards carefully to how much the fees will be and how they can be avoided. In addition, consumers should choose a card that issues paper statements so that they can be sure they aren’t paying any fees they don’t owe.

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