Prepaid debit cards seem like a good enough idea: You hand over cash and, in exchange, receive a debit card loaded with that amount of money.

Well, that amount minus a fee for setting up the card.

Then, you're free to use that card like you would cash.

Well, not really free. Because you'll likely be assessed more fees each time you use the card, whether you're buying a snack at your local convenience store, enjoying dinner at a London restaurant, or stocking up on a week's worth of groceries.

Indeed, the outrageous cost is why we don't like prepaid debit cards -- the latest heavily-hyped product to emerge from the credit card and banking industries.

The new Wal-Mart MoneyCard is the only one we can reluctantly recommend because its fees are more reasonable than any of the other cards we've seen.

Prepaid debit cards have a lot in common with gift cards or prepaid calling cards. Your money is held in an account and managed by a bank.

But obtaining a prepaid debit card is more like opening a bank account. You'll need to provide your address, phone number, date of birth and some form of government identification, such as your Social Security Number if you're a U.S. citizen or your passport number, personal tax ID or driver's license number if you're not.

You can apply over the phone, online or in person, at check-cashing stores or, of course, a Wal-Mart. Some outlets, like Western Union, can approve your application, and provide a temporary card and personal identification number, right away. Others might require a couple of weeks of get a card and personal identification number to you through the mail.

The owner's name is embossed on the front, just like a regular debit or credit card, and can be used to:

• Withdraw cash at ATMs.
• Make purchases with a PIN, as with a traditional debit card.
• Sign for purchases, as with a credit card.

Users can repeatedly replenish the account by depositing more money.

The credit card companies are pitching prepaid debit cards to three groups of potential users:

Travelers: Use them as an alternative to traveler's checks. Lost or stolen cards and their full balance will be replaced, most of the time. All you've got to do is promptly report the loss or theft, usually within two days. And since prepaid debit cards aren't linked to any of your bank accounts, or any of the personal information they contain, bad guys have no way of stealing your identity.

Low-income consumers: They're a safe, convenient alternative to carrying cash if you don't have a checking account and a regular debit card, or even a credit card. You can also pay bills online, rent cars or reserve hotel rooms -- transactions that require you to have some sort of plastic.

Employers: Replace paper paychecks with prepaid debit cards. You'll save money on printing, mailing and issuing replacement checks. All you have to do is issue each worker a card that can be reloaded each pay period.

All of that sounds great until you read the fine print and see the startling array of fees awaiting you:

• Activation. To get it all started: $5.95 to $49.
• Monthly maintenance. Up to $5.95 for plans that also require you to pay a transaction fee every time you use the card; $9.95 for plans that include unlimited signature and PIN purchases. (Annual plans available for $69.95.)
• Signature purchases. If you use the debit card like a credit card, meaning you sign your name on a slip of paper the merchant keeps, you'll pay up to $1 per transaction.
• PIN purchases. If you use your debit card like a traditional debit card, punching in your personal identification number to withdraw cash or make a purchase, up to $2 per transaction.
• ATM withdrawals. In addition to a fee for making a withdrawal, which is generally around $2, you'll also pay a fee to the ATM owner. International ATM withdrawal fees range from $3.50 to $4.95.
• Loading and reloading. Putting more money on the card, $3.95 to $5.95.
• Refunds. If you change your mind and want the balance on your prepaid debit card returned to you, you'll pay $5.95 to $10.
• Balance Inquiries. You can find out your balance online (free), by phone (50 cents or more) or at an ATM (surcharge applies).
• Customer service. Want to speak with a live person about a problem? Up to $2.
• Statements. Electronic statements are usually free, but paper statements that come in the mail can cost $1 to $5.95.
• Replacement cards. If you misplace your prepaid debit card and want it replaced, it'll cost you anywhere from $3.95 to $10. Need it expressed? Add another $20.

Let's face facts: We can easily see why banks and credit card companies love these things. We can't see why you should.

By Darci Smith

Interest.com Contributing Editor

Have a question about your finances? Ask us at editors@interest.com