A growing number of consumers are using prepaid debit cards as an alternative to traditional checking accounts.

The concept is simple.

You load cash onto the card and then use it like any other debit or credit card to buy everything from gas to groceries.

The drawback is all the fees.

These cards can charge a fee every time you use them at a store. Or to withdraw cash from an ATM. Talk to a customer service rep. Or even put more money into your account.

Here's what you need to know to find a prepaid debit card that won't cost you a fortune.

How prepaid debit cards work

The money you load onto a prepaid debit card is held in an account managed by a bank.

You can repeatedly replenish your card by depositing more money at an accredited agent or by having paychecks direct-deposited into your account.

Prepaid debit cards have the owner's name embossed on the front, just like a traditional debit or credit card and can be used to:

• Withdraw cash at ATMs.
• Make purchases with a personal identification number or PIN, just like a traditional debit card linked to a checking account.
• Sign for purchases, as with a credit card.

The banks and companies that issue prepaid debit cards argue that they're safer than carrying around large amounts of cash and you'll never be stuck with $39 overdraft charges.

Unlike debit cards attached to a checking account, prepaid debit cards are rejected if you try to spend more money than is in your account.

How to apply for a prepaid debit card

Obtaining a prepaid debit card is similar to 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; at Winn Dixie and Dollar General stores for the Discover Network Card, or at Walmart for the MoneyCard.

Expect to pay an activation fee of anywhere from $3 to $49, although some waive the setup fee if you sign up for direct deposit.

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 to get a card and personal identification number to you through the mail.

Where to find the best deal

The key to getting a great deal on a prepaid debit card is avoiding the most costly and frequently incurred fees.

That means you need a card that charges:

• No transaction fees. Reject any card that still wants $1 every time you sign for a purchase or $2 every time you buy something using your PIN.
• A monthly maintenance fee of $5 or less. We've seen cards that charge as much as $9.95 a month. That's too much. Same for cards that want an annual fee of $70 to $120.
• A loading fee of $5 or less. An increasing number of cards will drop this fee if you have a paycheck direct-deposited to your account. That's one of the best trends we're seeing with prepaid debit cards. Otherwise, putting more money on the card typically costs $3.95 to $5.95.

So where can you find the best prepaid debit card?

Go to Walmart.

The Walmart MoneyCard charges the most reasonable fees we know of, and you can reload the card at any store.

We think it's the best prepaid debit card around. And talk about convenience.

Or take advantage of the prepaid debit cards employers offer in lieu of paychecks, or governments use for Social Security or unemployment benefits.

They almost always provide lower fees and extra benefits than most debit card providers charge individual users.

Take, for example, the Direct Express Debit MasterCard, which the federal government is using to replace Social Security checks.

Virtually every prepaid debit card charges $2 to withdraw cash from an ATM, including the Walmart MoneyCard.

But DirectExpress cardholders get one free withdrawal a month at a specially designated network of 56,000 machines and pay just 90 cents for all other withdrawals.

They can also go to any MasterCard member bank and use the card to get cash from a teller without paying a fee.

By Darci Smith

Interest.com Contributing Editor