First banks entered the payday loan business.  They can give the loan a different name, but they are payday loans.  Now JP Morgan Chase, America’s largest bank, is launching a pre-paid debit card.  The roll-out has begun in 200 branches in 2 markets, but is expected to be available in all markets this summer.

For now, regulations on debit cards are not a problem for banks because there basically aren’t any.  For consumers this means there are few legal protections and for bankers it’s a chance to make more money than they might potentially make in the future.

But, to their credit, most banks are offering consumers the same legal protections as a credit card if the card is lost or stolen.

A pre-paid debit card is different from a debit card attached to a checking account because of the fees charged.  A pre-paid debit card is a la carte, charging users for virtually transaction, from purchases, ATM transactions, balance checking and more.  Most banks charge an activation fee, which ranges from $3 to $15.  Most also subtract monthly fees from the card balance.  Monthly fees range from $3 to $10. 
For some consumers the cards still make sense, because they do not allow you to over-spend the balance on your card, unlike a checking account for instance, in which you can over-spend the amount in your account. 

This will of course come with a hefty fee, which users of pre-paid debit cards do not have to worry about.

Consumers who turn to pre-paid debit cards may be shocked to see, after fees, how little money they actually have to spend.