Prepaid cards gaining prominence despite high fees
One of the most recent studies conducted by Javelin Strategy and Research has revealed that there was an increase of 18 percent in the usage of prepaid cards last year. In the year 2011 close to 13 percent of American households had at least one member using these cards. Despite the growing usage of prepaid cards, debit cards that are linked to checking accounts still continue to rule to roost and are the first choice. The result of the study conducted by Javelin has also revealed that prepaid cards are among the very few financial products that witnessed growth despite the trying market conditions last year. The number of consumers with checking accounts, debit cards and credit cards is consistently decreasing.
Payments research director at Javelin, Beth Robertson, said that the prepaid cards are no longer reserved only for consumers who do not have monetary constraints. He also said that the features of the prepaid cards available today are similar to and sometimes even better than the features offered by bank checking accounts. Prepaid cards now allow card holders to manage their cards using social media and mobile devices as well. Customers can also transfer funds from their account to that of another person using these cards.
The improving features of these cards are leading to their extensive usage. As per the data available from Mercator Advisory Group, in the year 2009, close to $28.6 billion was directed towards reloading prepaid cards. This figure is set to reach the $200 billion mark by the end of 2013.
To learn more about the reasons for the popularity of the prepaid cards, the Financial Security Portfolio of Pew Health Group, held focus groups with consumers who used prepaid debit cards. Consumers said that the main reasons for the popularity of these cards were the facts that they helped curb the spending habits and also budget their expenditure well. Most of them said that they would reload their cards with a specific amount and once the limit was reached, they would stop spending further. Susan Weinstock from Pew said that most consumers preferred paying the load fee of up to $4 rather than spend up to $35 on overdraft charges.