Consumer Reports in the U.S. looked at 26 prepaid cards and ranked them based on fees, ease of use, and transparency about their policies and services. While the report focused on American prepaid cards, the dangers and pitfalls are relevant to consumers on both sides of the border.

Prepaid cards, which act like debit cards but have their own set of rules and restrictions, are touted as an alternative to traditional bank accounts and credit cards and are marketed toward students and low-income earners with a history of poor credit.

On the surface, it seems like prepaid cards are a good way to spend money without going into debt. That makes them ideal for post-secondary students – parents just preload a card with a fixed amount and don’t have to worry about their child living beyond his or her means. Once the money is gone you can’t use the card again until you load more cash.

But prepaid cards come with hidden fees that aren’t apparent unless you comb through the terms and conditions. Activation fees, monthly service fees, ATM fees and transactions fees can eat up a good chunk of the money on your card.

Visa, MasterCard and American Express all offer prepaid cards with different features so you’ll have to do your research to compare them. Most have a host of unnecessary fees that should be avoided.

A non-reloadable prepaid card like MasterCard’s Vanilla card charges users $2.50 per month beginning on the seventh month after you activate it. You can use the card at any store that accepts MasterCard, but you can’t take out money at an ATM and you can’t reload the card.

Related: Spend prepaid Visa gift cards to avoid fees

MuchMusic’s prepaid MasterCard is one of the worst offenders for charging high fees. You’ll pay $39.95 to activate the card, plus another $9.95 the following year. Your card expires after two years, and an inactivity fee of $2 per month will be deducted from any remaining balance. Not only that, you’ll pay $1.50 each time you reload the card and $1 to get your money from an ATM.

RBC’s Visa gift card is one of the more reasonable prepaid cards on the market. There’s a $3.95 fee charged to the purchaser of the gift card; however the recipient won’t pay an activation fee or any monthly service charges while they use the card. The RBC Visa gift card requires an expiry date to process transactions, but the funds loaded on the card will not expire. You can buy the cards in denominations from $25 to $500.

Despite their many disadvantages, prepaid cards are growing in popularity and are heavily advertised around the holiday season and for students to use while attending post-secondary.

They’re promoted as a budgeting tool, allowing parents to control how much their child spends and making it impossible to go into overdraft or unwanted debt. The cards also give parents a way to get money to their child in a pinch.

A better approach for mom and dad is to buy regular store gift cards that come without fees and expiry dates. A gift card to a grocery store chain like Loblaw or Sobeys can make sure your child is eating well while he or she is away studying.

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CIBC, TD and RBC also offer Visa Debit technology so you can use your debit card in the exact same way as a credit card while avoiding the fees that come with prepaid cards.