Once thought to be an option only for low income people who could not qualify for a more traditional banking product, the prepaid card has become more and more widely accepted.
According to a report from Javelin Strategy & Research, more than 1 in 8 American consumers now carry reloadable prepaid cards. The bigger picture is the fact that this reflects an increase of 18 percent over the number of US adults using prepaid cards in 2011. These cards are now being used by a variety of users and for a variety of reasons.
- Online purchasing
- Budgeting tool
- Direct deposit
- Pay bills
- Link to savings
- Money management
Initially these cards were criticized for high fees, activation charges, and a variety of other costs. Fortunately the competition to get your business has had a positive impact on the evolution of the prepaid card industry. This competition to get new customers and keep them long-term has resulted in better features and lower fees, increasing the appeal for many.
One reason for this shift may be partly due to the rise in bank fees on checking accounts (21 percent higher than six years ago) as well as fees linked to traditional credit and debit cards. In an effort to find an alternative to these high fees, many are looking at other options. Looking through the long list of prepaid cards now available can be time consuming, but you will need to closely compare the fee structure of each card to determine which one is best for you. You will see products offered by names you don’t recognize and by big names such as American Express, U.S. Bank, and on and on.
The prepaid card has become an acceptable – even desirable – way to manage your finances. You can’t spend what you don’t have and with prepaid cards you only have access to what you have deposited onto the card. This is an appealing concept to anyone who is trying to recover from debt or wanting to stay out of trouble. This is also a great way for parents to remotely add funds to cards for their kids who are away from home.
Although prepaid cards are clearly on the rise, many people still don’t know what they are and how to use them. But thanks to massive advertising and improved features, the stigma of the prepaid card being “for someone else” is fading away.