The lowdown on Wal-Mart's debit card

If the card is reloaded by cashing a paper check, the $4.64 reload fee is waived, but you'll pay a check-cashing fee of $3. Even that, however, is lower than the 2% to 5% fee check-cashing services might charge.

"The only thing comparable to Wal-Mart's low check-cashing fee is grocery stores," Tescher says.

Both PIN-based and signature transactions are free.

Requesting a periodic paper statement of your transactions on the Wal-Mart MoneyCard will cost you $2, as will making an operator-assisted call to discuss your balance. But checking your balance on the automated phone service is free, as are inquiries by e-mail and text message.

Careful what you wish for

Banks now charge as much as $39 for a bounced check, and for consumers on the ragged edge, multiple overdrafts aren't uncommon. A credit card offers almost open-ended trouble: over-limit and default fees of $39, plus deeper and deeper debt.

Yet dealing in cash and money orders has huge drawbacks as well. The biggest is safety.

• Video: Debit or credit? The final word

"Carrying a lot of cash is dangerous," says Janneke Ratcliffe, the associate director of the Center for Community Capital at the University of North Carolina. "People get robbed and mugged and murdered for their money."

Beyond that, most of the U.S. financial world has evolved beyond cash, so much that daily life without a credit card can be an immense hassle.

"When you're dealing with cash, it takes more time to do things," Tescher says. "And time is money."

Before you sign up for a prepaid debit card, ask yourself why you want one.

• If you're looking to shop online, trying to control your spending or battling a long history of bounced checks, a prepaid card should suit you.

• If you're trying to rebuild your credit history, avoid a prepaid debit card and choose a secured card that reports to one of the three big credit-reporting agencies: Experian, TransUnion and Equifax.

• If you want to use your prepaid card to pay bills online, read the fine print. Wal-Mart's card and some others allow some of your creditors to make automatic monthly withdrawals. But they won't let you send a payment on your own. Other prepaid cards offer online banking features, though typically there are additional fees.

• If you're looking for financial "training wheels," a prepaid card can be a good way for teens and college students to manage money.

Published March 25, 2008

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