Our Use of Prepaid Cards Has Doubled Since 2009, But Dangers Remain
That study comes out at a time when "general purpose reloadable" prepaid credit cards are being used heavily by consumers.
The Pew Charitable Trusts issued a Consumers Continue To Load Up On Prepaid Cards study last week showing U.S. cardholders loaded $64 billion into prepaid cards in 2012, twice as much as in 2009.
The market isn't just Americans leaning on prepaid cards because they have bad credit and can't get a traditional card."More consumers are turning to prepaid cards as a convenient tool to control spending and fees," says Susan Weinstock, director of Pew's safe checking research division. "While prepaid cards offer many benefits to consumers, they are a relatively new product with little oversight. A lack of protections undermines prepaid cards as a safe and easy way to manage money."
- Prepaid card cards are a better deal for consumers than they were two years ago largely because of heightened competition among card providers and there being fewer "fly-by-night" prepaid card companies in the marketplace.
- Prepaid cards are also now a better deal than bank checking accounts.
- Prepaid cards "do not offer consumers the limited liability protection required by federal law for checking accounts." That's because some financial liability has been "shifted" to card consumers.
- Not all prepaid cards are covered for financial losses by the Federal Deposit Insurance Corp.
- If there is a problem with prepaid cards, it's up to prepaid cardholders to bring in their own third-party "decision maker" to mediate the issue, and possibly make a decision that works against the cardholder.
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