Many U.S. states forbid predatory finance companies from charging bogus monthly "inactivity fees," but prepaid debit card company Netspend makes sure to gouge customers in states that don't have adequate consumer protection laws in place.
Take the case of one Redditor who bought their child a $50 prepaid cash card. The kid held onto the card like it was cash, but after three months, NetSpend started pulling $5.95 a month from the balance, calling it an "inactivity fee."
Netspend didn't immediately respond to my request for a comment, but I'd love to hear its carefully worded excuse for why it charges a monthly "inactivity fee."
Netspend's Visa prepaid card has many other fees tied to using it. If you buy the card at a retail location, it costs $9.95. Every purchase you make gets a $2 fee tacked on. An ATM withdrawal costs $2.50. Adding funds coasts $3.95. Checking the balance of the card at an ATM costs $0.50. A declined transaction costs $1.00. The really sad thing about this is that poor people (and prisoners) who don't have access to regular banks are forced to use expensive prepaid debit cards like this.
Paypal has its fair share of issues, but it's an order of magnitude better than NetSpend. In fact, when the Federal Trade Commission filed a lawsuit against NetSpend for blocking access to its own customers' funds, the FTC used PayPal to send the settlement money to more than 33,000 NetSpend customers.
