Kmart shoppers can avoid a $3.95 activation fee when they sign up online for the retailer’s new reloadable, prepaid MasterCard, but those who do so will need to remain vigilant to avoid other fees.
Kmart’s new card is offered under the Halogen brand, and it offers unbanked individuals some advantages. For example, cardholders will have access to free ATM withdrawals at a nationwide network of more than 20,000 ATMs. That’s 2,000 more than Bank of America promotes on its website. In addition, there is no monthly maintenance fee as long as certain requirements are met and cardholders can have their paycheck, a tax refund or government benefit check directly deposited on the card at no cost.
“Kmart's Halogen Reloadable Prepaid MasterCard is a great money management solution for customers seeking an alternative to cash, credit or checking accounts,” said Jai Holtz, vp of financial services for Sears Holdings, parent company of Kmart. “With the introduction of the Halogen Card, we’re giving our customers a smart, convenient and safe way to manage their money and gain control over their personal finances.”
Prepaid cards are a viable financial solution for individuals who, for whatever reason, don’t use services offered by traditional banks or credit unions. However, such products typically contain a range of fees that kick in under certain circumstances and can add up over time if cardholders aren’t careful.
For example, Kmart touts a zero activation fee for online sign up, but loading funds onto the card requires a visit to a store where a $3.95 is incurred. Conversely, it costs $3.95 to purchase the card in the store, but there is no charge for the initial loading of funds. The fee for the subsequent reloading of funds in store is $3.95, whereas direct deposit is free.
In addition to the reload fee, cardholders who don’t load at least $1,000 a month on the card or complete at least 30 qualified debit transactions incur a monthly account service fee of $5.95. Cardholders also face the prospect of a $2.50 ATM fee if they stray from the extensive MoneyPass network of ATMs.
For cardholders who meet the deposit or usage requirements and stick with network ATMs the Halogen card is a low cost and viable alternative to a traditional bank. Fees add up more quickly for those of limited means who don’t meet the $1,000 minimum deposit threshold or use the card sparingly and occasionally