In the latest congressional assault on card fees, a group of Senate Democrats introduced legislation Friday that would limit the types of fees that could be charged on prepaid cards.

The bill would ban overdraft, balance inquiry and customer service fees and would require more disclosure about fees being charged.

Introduction of the bill comes as credit unions and banks are grappling with a Federal Reserve proposal, mandated by Congress, that will cut interchange fees on debit card transactions by as much as 70%.

The prepaid cards targeted by the new bill range from gift cards that can be used only at specific retailers or until a set amount is spent, to general-purpose cards that can be used like traditional debit or credit cards, as long as consumers keep reloading funds.

General purpose cards can replace bank accounts by accepting direct deposits directly onto the cards, and are generally marketed to younger, poor consumers, who rely heavily on cash and do not have much access to credit.

While the bill has little chance of passing in this Congress it will serve as a marker for the next Congress when the Democrats will retain control of the Senate.

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