ARLINGTON, Va. (TheStreet) -- Roughly 62% of prepaid cards lack the features necessary to meet the average consumer's needs, according to CardHub's latest Prepaid Report. That's right: Despite all the buzz surrounding this new-to-mainstream-use financial product, the odds are that a given prepaid card won't do much for you. Oh, and picking the wrong prepaid card can also cost you upward of $350 per year.
Wasting a bunch of money on a prepaid card that doesn't even bolster your financial management repertoire is a worst-case scenario. Unfortunately, it will inevitably become reality for a large segment of consumers given our overall lack of financial literacy and the marketing power behind some of the highest-profile offers.
That's not to say that all prepaid cards are bad, though. You can certainly find a prepaid card that saves you money and makes personal finance easier if you know what you're looking for (i.e., why you need or want a prepaid card) and are willing to read a bit of fine print.
The first step is understanding exactly what a prepaid card is as well as what it can offer.
Prepaid card overview
First of all, a prepaid card is not a credit card. It's important to say that right off the bat because most consumers search for "prepaid credit cards," borrowing a term crafted by industry players looking to deceive.
In the most basic sense, a prepaid card is a debit card without the accompanying checking account or physical checkbook. More specifically, it's a debit-based spending vehicle that enables you to load funds to an electronic account and then make purchases at the point of sale, cash withdrawals at ATMs, monthly bill payments, etc. You can load funds online, at a retail location, at an ATM or via direct deposit.