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For years, many consumers who used prepaid cards thought of them as an alternative to a checking account. They could buy a prepaid card from a retailer, load money onto it at a grocery store or at a check-cashing outlet and then use it to make payments—up to the amount deposited on the card. It was a great way to avoid having to keep a minimum balance in a bank checking account and it reduced the risk of being charged overdraft fees. But these cards weren’t always as good as they seemed.

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