The NYT leads today with a piece — disturbing to Blawgletter — on the high cost of paying in advance for a debit card.  It cites examples like these:

The MiCash Prepaid MasterCard docks cardholders a $9.95 activation fee. Like many competitors, it then charges numerous recurring fees, including $1.75 for each A.T.M. withdrawal, $1 for each A.T.M. balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service.

The Millennium Advantage Prepaid MasterCard goes further, listing an application fee of up to $99. The Silver Prepaid MasterCard advertises that it does not charge for overdrafts as many debit cards do, but it gives itself the option of charging a $25 shortage fee if customers exceed their balance.

“It’s a very expensive way to bank,” said Jean Ann Fox, director of financial services at the Consumer Federation of America.

We suspect that the gouging of people who fall for the allure of a hyper-costly debit card has a lot to do with federal pre-emption of state consumer protection laws.  Banks can trump unfair and deceptive trade practices statutes by citing federal rules. 

Should we either fix the federal rules to protect people against predatory debit card practices or remove their pre-emptive effect so that state laws can again do the job?