When it comes to prepaid cards, most consumers expect some sort of fee structure. Monthly fees, transaction fees and reloading fees are all part and parcel of the prepaid card game.

A recent survey by Bankrate.com looked at the fees of 18 cards and found some interesting trends. First off, no prepaid debit card was fee-free.

[Free Resource: Check your credit for free before applying for a credit card]

The most common fees of the cards that were surveyed were ATM balance inquiry fees (78%), monthly fees (66%), activation fees (61%), fees for using the issuer’s own ATMs (61%) and fees for receiving a statement by mail (61%).

Bankrate says the fee structures found in this survey lead them to recommend low-cost or free checking accounts to most, but not all, bank customers.

“Consumers with a tendency to overdraw their checking accounts or those unable to obtain checking accounts may find a prepaid card to be a suitable alternative, but it is important to shop around to find the card that will produce the lowest fees for the cardholder’s particular financial tendencies,” said Greg McBride, CFA and senior financial analyst for Bankrate, in a press release.

[Credit Cards: Research and compare prepaid credit cards at Credit.com]

Bankrate not only looked at the cards from another direction also, analyzing what the total fees would be for a consumer who makes 10 purchases, four bill payments, a customer service call and an out-of-network ATM balance inquiry and withdrawal in a month. What they found was that the range of fees was more than $20—confirming that shopping around for a card with low fees is the key to major savings.

Image: avlxyz, via Flickr

When a clerk at Target told Annette Tierney her she could save 5% on her purchases by opening a Target REDcard debit card, it was a no-brainer. “Every time we go in there we get a cart full of stuff,” she explains. “We usually spend $250 to $500.”

It also seemed simple enough—the store’s debit card is set up to draw from a customer’s existing checking account.  She was shocked, though, when her application for the card was declined.

Since she and her husband avoid debt and have “great credit,” her first thought that was that perhaps they had been victims of identity theft. But when she called the customer service number provided, she was told her application was declined due to a lack of check writing history with Target. She told the representative that she uses a bank debit card when she shops at Target, but the representative wouldn’t budge. She was told she’d have to first establish a check writing history with Target to be considered for the card.

[Free Resource: Check your credit for free before applying for a credit card]

Tierney’s situation raises the question: Can you get turned down for a debit card? On the surface, it would seem that the answer would be “no,” or at least not likely, since the card is only used to access the money you already have in your bank account. But, in fact, you can be turned down for a debit card, though the reason is most often due to prior checking account problems.

That’s what Rosalie Zamora found out when her application to open a Target REDcard debit card was declined.  “I received a ‘regret’ notice indicating that there was some negative reporting from a reporting agency called ‘Certegy’,” she said in an email to Credit.com. Certegy provides check authorization and guarantee services to merchants and businesses nationwide, and is considered a specialty consumer reporting agency under federal law.

[Related article: How to Get Your Free Reports from Specialty Consumer Reporting Agencies]

Zamora called Certegy and was told there was no negative information on file for her. She was then referred to another consumer reporting agency, Telecheck, which found an unpaid debt from “ACCS Bad Check Restitution.” When she called that company, she found out that her information had been mixed up with that of someone who previously bounced a check:

I was sent 3 letters of apology stating that a clerk at a store keyed in a driver’s license number incorrectly for someone cashing a $50 dollar check a few years ago that bounced. That driver’s license (number) ended up being mine and went on my record. They say that they have unlinked my driver’s license to that case and I should be good to go now.

Tierney, on the other hand, still doesn’t understand why she can’t get the card. The debit card application states that “Target may gather any information considered necessary and appropriate, including consumer reports,” however it makes no specific mention of requiring consumers to have a check-writing history at the store.

“They didn’t (admit) it was a ridiculous excuse,” she fumed.

She’s since sent email complaints to members of Target’s executive board. I shared with her that I was surprised by her story because I opened a Target REDcard debit card last year and, to my knowledge, I have never written a check at Target.

Target officials declined to comment for this story.

[Credit Cards: Research and compare prepaid credit cards at Credit.com]

Tierney speculates that Target would rather have her sign up for its credit card than the debit card. “I feel like they are using this great advertising campaign, but I feel like what they really want is for people to use their credit card. They want to push American consumers deeper and deeper into debt. That’s just my theory,” she says.

And even though Zamora’s check-writing history has been cleared, she didn’t appeal the decision with Target. “Forget it,” she says. “I’m done with Target. Although it’s not their fault, this issue left a bad taste in my mouth.”

[Related Article: Target REDcards Give You a 5% Discount: But At What Cost?]

Image: Mr. T in DC, via Flickr

Federal law now prohibits lenders from using certain tactics to market credit cards to young adults, so now some major lenders are looking for new ways to make a name for themselves on college campuses across the country.

One new strategy is partnering with colleges to make student IDs into prepaid cards, which will not allow students to rack up credit card debt, but will give them a little more spending flexibility, according to a report from Dow Jones Newswires. Major lenders such as U.S. Bank and American Express have entered into these deals with dozens of colleges across the country, allowing college kids to use their student IDs like they would any debit card at businesses both on and off campus, since the piece of plastic bears the logo of companies like Visa, MasterCard and AmEx.

[Free Resource: Check your credit for free before applying for a credit card]

These cards can typically be loaded from any traditional bank account, and thus used like a debit card, but typically do not carry the large amounts of fees typically associated with prepaid cards, the report said. Many will still charge students for ATM withdrawals, inactivity on the account, or receiving paper statements, but annual or monthly account maintenance fees are typically not applied.

For banks, this type of card is a win-win, the report said. They still get to be on campus despite federal rules about marketing credit cards to young adults, are able to obtain the information for college students for future marketing, and also have forged an existing connection with potential borrowers.

“We see the students as really the future customers of U.S. Bank,” Whitney Bright, vice president and market leader for campus banking for U.S. Bancorp, told the news agency. “They are the ones that we hope will bank with us while they are in college and look to us as they graduate.”

[Credit Cards: Research and compare student credit cards at Credit.com]

New federal laws, imposed by the Credit Card Accountability, Responsibility and Disclosure Act, prevent young adults under the age of 21 from obtaining a credit card of their own without having either an adult co-signer on the account or otherwise providing proof that they could afford the account on their own. Nonetheless, recent studies have found that the majority of college students have at least one credit card.

Stories and reports of larger scale data breaches in the financial services space seem to be happening with more frequency of late.  Just this past week, Global Payments, a company that processes credit card transactions, reported that as many as 1.5 million card numbers were compromised in a data breach.

Should you be concerned?  What can you do to protect yourself from the adverse effects of a data breach?  Will it affect your credit score if your information has been compromised in one these larger scale data breaches?

The unfortunate reality is that breach victims are at a greater risk. According to the research firm Javelin, consumers who received a breach notification last year were almost 10 times more likely to be fraud victims than those who did not. So the negative effects of having your information compromised can be very real.

[Credit Check Tool: Try Credit.com's Free Credit Report Card]

In general, everyone should be aware of their personal identification and credit assets and follow a few simple guidelines to make sure there is nothing “fishy” going on with your credit and identity.   These action items are especially critical if you have any indication that your information was a part of the data breach.

1. Review Bank Statments

Thoroughly review your credit card and checking account statements at least monthly to ensure the transactions listed are valid and belong to you.  Far to many of us don’t take the time to do this or and instead just glance at the summary page.  With online statement services, you can check these every week, day or more frequently. All lenders have easy to follow guidelines should you find suspicious information.  Don’t delay to notify the lender because you will want to stop any potential fraudulent activity as soon as possible.

2. Check Your Credit

Periodically check your credit report to ensure all the information being reported on you is accurate and belongs to you.  You are entitled to a minimum of one free credit report a year, which you can get at www.annualcreditreport.com. You can also use Credit.com’s Free Credit Report Card to regularly check your overall credit standing.  In addition, the credit reporting agencies and other companies have credit report monitoring services that will notify you when new information posts to your credit file.  There is usually a fee for the notification or monitoring services and you can compare the services and their prices at Credit.com too.  Access to a monitoring service for no charge may be offered to you by the company responsible for the data breach if your information has been compromised in one of these larger scale data breaches (you will receive notification of this free access by the company).

3. Take Action

The credit reporting agencies have specific data dispute processes you should follow if you find inaccurate information on your credit report.  They also have special processes and services they can provide if you are a victim of fraud that protects your credit file from being accessed by unauthorized entities.

Generally speaking, it is unlikely that your credit score will be substantially impacted by a large scale data breach.  If it is determined that your credit card account is negatively implicated, the lender is likely to close down the account and re-open a new one where the information (date open, current credit line, current balance, etc.) is transferred to the newly created account.  The closed account would likely appear as closed or stolen on the credit report and the historical payment history would remain (any historical missed payments would continue to be reported and considered by the score).

[Featured Products: Compare credit score, report, and monitoring plans at Credit.com]

If the data breach leads to fraud abuse, that could have a substantial impact on your credit score.  The exact impact is not driven by the identification of fraud in and of itself, but by what the “fraudster” does with your identity and with the credit they open and use in your name.  The score can be affected if/when they run up large credit card balances and/or miss payments.  You will need to work with your lenders, the credit reporting agencies and law enforcement entities to resolve any fraud related occurrences.

While a data breach is a serious concern, you should not wait for such an event to impact you before you engage in these preventative actions.  The key is to identify inappropriate use patterns as soon as possible to protect your identity and good credit.

[Featured Products: Research and compare Identity theft protection plans at Credit.com]

Image: devdsp, via Flickr

The recent credit card security breach at Global Payments is a wake-up call for all of us. We get in a comfort zone and forget that our financial information isn’t really in a fool-proof “vault.” Hackers sometimes find a way to breach even the best security systems.

The folks who hack into data systems aren’t like the bumbling thieves from Home Alone. No, these people are tenacious, intelligent and crafty. We can build great security systems, but keep in mind that hackers tend to view this as a new challenge.

[Credit Check Tool: Try Credit.com's Free Credit Report Card]

Of course, you can’t live your life afraid to use your plastic, either. In the Global Payments breach, the hackers got both credit card and debit card account numbers, which means they have the data they need to create a clone card. Now seems like a good time to review what consumer protections you have when it comes to fraud.

I’ve gotten a lot of questions about how fraud protections differ between credit cards and debit cards. The Federal Trade Commission offers more details and also give tips about how to prevent other types of fraud at Facts for Consumers. But here’s a quick and dirty look at the basic facts.

[Related Article: What to Do When You're a Victim of a Data Breach]

Credit cards: With credit cards, your maximum liability for fraudulent charges is $50. If you report the loss or theft of your card before it’s used, you’re not liable for anything. In most cases, even the $50 is waived (Visa, for instance, has a zero liability fraud protection policy).

Now, if the fraud involves a stolen account number and not the card itself, then you have no liability. You really have your best possible fraud protection with a credit card. At some point, we’ll probably all be using smart cards. These cards have chips and it’s almost impossible to clone the cards and go on a shopping spree. Smart cards would go a long way toward limiting the expense and chaos when a security breach occurs.

[Credit Cards: Research and compare credit cards at Credit.com]

Debit cards: The rules vary based on the situation. If you’ve lost your card or it’s been stolen, you must report the loss within two business days to limit your liability to $50. If you take more than two days to report it, you can be liable for up to $500.

If you see unauthorized charges on your statement, but your card isn’t missing, you must report the fraud within 60 days of receiving that statement. If you fail to do so, your losses could be unlimited.

[Featured Products: Research and compare Identity theft protection plans at Credit.com]

Image: Ell Brown, via Flickr